BC Province HST: Tax Payer
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BC HST Rate Cut is Win-Win for Everyone
HST in BC is on the verge of elimination. News is Ottawa is already in talks with Victoria how to fold down HST and get the $1.7 billion back. That was the incentive Ottawa paid to Victoria for introducing HST.
Undoubtedly HST is good for both Businesses and Consumers. Businesses are immediately saving 7% PST with the introduction of HST. Unfortunately consumers have not been able to get the benefits of this savings due to the reluctance of many business owners to pass on the savings. The pricing change of products and services or the job creation due to HST has not taken effect as promised by the finance minister. Sure, it created a lot of anger among the consumers.
What Premier Gordon Campbell could not do to save the HST, the new Liberal part leaders might be actually accomplish it. Keep the party in power, make voters happy, and let the businesses take input tax credit by saving HST, with a promised rate cut.
At present HST rate in BC is 12%. New BC Liberal party leader candidate Kevin Falcon promised a HST rate cut to 10%, which makes a lot of sense and should be welcomed by both businesses and consumers.
Everyone will see immediate effect, if the HST rate cut is implemented.
But, we should be aware of the fine prints in Mr. Falcon HST rate cut promise.
1. Legally, HST rate cut will not be possible before July 1, 2012.
2. First year, that is 2012-2013, HST rate cut will be 1%. So, HST will be 11%.
3. Before another 1% rate cut take effect, in 2013-2014, Provincial Revenue will be reviewed and effect of 1% rate cut on the Province. If the Province cannot afford to lose 1% tax revenue, it will not be implemented in 2013-2014.
According to analysis, and revenue projection, for each 1% tax rate cut, the province will lose between $800-$900 tax revenue.
My conclusion is Liberals in BC might be able to stay in power and also keep HST alive, but the tax savings is still a long way to reach the consumers, unless businesses take immediate action to pass along the tax savings.