BC Referendum on HST

Pliny · June 18, 2011

I am now paying PST on a lot of services that gain little or nothing from the switch to HST. I am paying more.

Would you rather filter your payments through a corporation or just pay it directly. I understand your outrage at seeing what taxes you are now paying that you were previously unaware of paying.

ToadBrother · June 19, 2011

I am now paying PST on a lot of services that gain little or nothing from the switch to HST. I am paying more.

And those companies have been getting a free ride for years. Shouldn't a tax system be fair? Why should certain kind of businesses be penalized by charging a sales tax and others not?

Wilber · June 19, 2011

And those companies have been getting a free ride for years. Shouldn't a tax system be fair? Why should certain kind of businesses be penalized by charging a sales tax and others not?

Ah, I'm the one being taxed, not them. Also, the ones charging the tax and those not charging it are in different lines of business. They are not competing with each other.

Edited June 19, 2011 by Wilber

Pliny · June 19, 2011

Ah, I'm the one being taxed, not them.

Right! Their concern is a drop in sales because you have to pay the tax. The others have all adjusted to the fact you are paying the tax.

They collect it and have to remit it so are they paying the tax and not you? It is easy to see it is you. If they had to pay the tax and not charge you the tax then they would have to include the tax as a part of the profit from their sales. You may beleive they are paying the tax but you are in reality.

Also, the ones charging the tax and those not charging it are in different lines of business. They are not competing with each other.

They are all competing for your dollar.

Wilber · June 19, 2011

They are all competing for your dollar.

All taxing more things does is give me less dollars to spend on anything, taxed or not.

Smallc · June 20, 2011

Ah, I'm the one being taxed, not them.

Under the PST, businesses paid PST and didn't get the same input credits as under the HST.

ToadBrother · June 20, 2011

All taxing more things does is give me less dollars to spend on anything, taxed or not.

And how much more tax will you get to pay if the Province has to return 1.6 billion dollars?

Do the sensible thing. Keep the tax, toss out the Liberals. Believe me, it's what the NDP is secretly praying for.

ToadBrother · June 20, 2011

Ah, I'm the one being taxed, not them. Also, the ones charging the tax and those not charging it are in different lines of business. They are not competing with each other.

Business still have to collect sales taxes. It costs them money, and the more esoteric and complex the rules, the more expensive it is to collect, and the more you end up paying. PST's complexity created a hidden cost. If you had any experience with having to administrate the PST, you would understand that it is possibly one of the worst kinds of taxes there is.

Beyond that, you didn't answer my question. Why should a restaurant get away without having to collect the tax but a retailer have to?

Wilber · June 20, 2011

And how much more tax will you get to pay if the Province has to return 1.6 billion dollars?

One still has to wonder, if the tax is so wonderful, why did it take a 1.6 billion "incentive" to make it happen.

Do the sensible thing. Keep the tax, toss out the Liberals. Believe me, it's what the NDP is secretly praying for.

That would be a much more appealing option if they hadn't made Dix leader.

Pliny · June 20, 2011

All taxing more things does is give me less dollars to spend on anything, taxed or not.

I thought the argument was that it was just a tax shift from corporations and not a tax increase and the apparency is that you are now paying more. I am just saying you have always been paying it and now any "shift" is just a more direct tax to you and more transparent.

Anyway, I'm voting no.

ToadBrother · June 20, 2011

One still has to wonder, if the tax is so wonderful, why did it take a 1.6 billion "incentive" to make it happen.

That has been the standard since the Federal Liberals first developed the HST in the 1990s.

But whatever you think of it, the fact remains that if we reject the HST, we have to pay that money back, which means either fewer services or higher taxes, and probably both. Your advocated solution to the HST seems even worse than the problem.

That would be a much more appealing option if they hadn't made Dix leader.

Then vote Conservative. Getting the HST was a part of their platform until they decided to jump on the Delaney-Vanderzalm bandwagon.

ToadBrother · June 20, 2011

I thought the argument was that it was just a tax shift from corporations and not a tax increase and the apparency is that you are now paying more. I am just saying you have always been paying it and now any "shift" is just a more direct tax to you and more transparent.

Anyway, I'm voting no.

Voting no, as in "No to extinguish the tax?" That's how I'm voting. We should have got on the HST bandwagon fifteen years ago when the Feds first started dangling the carrot. VATs are pretty much the standard all over the world.

Wilber · June 20, 2011

I thought the argument was that it was just a tax shift from corporations and not a tax increase and the apparency is that you are now paying more. I am just saying you have always been paying it and now any "shift" is just a more direct tax to you and more transparent.

Anyway, I'm voting no.

Yes, it is a tax shift to me. I have no doubts on that score. Taxes shifted from exporting companies to me are subsidizing foreign consumers at my expense. I don't buy this line that it will not be costing the consumer more, because it does. On the other hand, it may be a positive move for the economy as a whole.

I haven't yet decided how I will vote.

msj · June 20, 2011

Under the PST, businesses paid PST and didn't get the same input credits as under the HST.

True enough.

However, keep in mind that a retailer did not pay any PST on the wholesale cost of inventory - contra the video in the OP.

So when a shoe retailer (or even wholesaler) was buying shoes and sending them up the chain the PST was not being added at every level. The video shows PST going through 5 different levels compounding costs which is inaccurate, to say the least.

In fact, certain industries (forestry, mining, fishing) didn't pay PST on many types of equipment and gear.

So, yes, PST was a cost of doing business - some businesses could pass the cost along while others could not (competitive industries - particularly export oriented ones who are competing in world markets at world prices).

We, as an accounting firm, paid PST on our operating expenses like supplies, computers, software etc.

Given that our industry is competitive and we charge based on going market rates (i.e. not cost plus) switching to the HST does not mean we necessarily pass any of those savings onto our clients.

Ultimately, maybe we will, but I doubt it.

Wilber · June 20, 2011

However, keep in mind that a retailer did not pay any PST on the wholesale cost of inventory - contra the video in the OP.

So when a shoe retailer (or even wholesaler) was buying shoes and sending them up the chain the PST was not being added at every level. The video shows PST going through 5 different levels compounding costs which is inaccurate, to say the least.

Quite so. When I was a youngun working in a gas station (back when gas stations actually did mechanical work) I was often sent to parts departments to pick stuff up. Every company had a PST number which exempted them from paying PST on parts being used on jobs where the tax would be paid by the final customer.

If it was a part I was going to use on my own car, I would give them the PST number in order to get the dealer price but tell them I would pay the tax, which they would then charge me.

msj · June 20, 2011

If it was a part I was going to use on my own car, I would give them the PST number in order to get the dealer price but tell them I would pay the tax, which they would then charge me.

I have a client who was audited under the PST several years ago.

Auto body repairs and collision work.

Some of the sandpaper they used they should have paid the PST on (and not charged through to the final customer).

Other sandpaper they used they should not have paid PST on and charged the final customer the PST.

It was weird and stupid.

Hopefully the PST won't come back because the HST has some weird and stupid rules but nothing as bad as that.

Pliny · June 20, 2011

The video shows PST going through 5 different levels compounding costs which is inaccurate, to say the least.

In fact, certain industries (forestry, mining, fishing) didn't pay PST on many types of equipment and gear.

So, yes, PST was a cost of doing business - some businesses could pass the cost along while others could not (competitive industries - particularly export oriented ones who are competing in world markets at world prices).

This is correct. The fact an Economist could state this, as occurred in the video, means she was confused or was confusing the GST with the PST.

The PST was only paid once at was determined the final level of consumption. A plumber or electrician paid PST on materials that became exempt upon becoming real property - for which PST was not applicable, and were embedded in the cost but certainly, not on five levels.

If the confusion of that economist is forwarded as fact there is no wonder about our necessity for accountants.

Pliny · June 20, 2011

Hopefully the PST won't come back because the HST has some weird and stupid rules but nothing as bad as that.

Amen to that.

Wilber · June 20, 2011

I have a client who was audited under the PST several years ago.

Auto body repairs and collision work.

Some of the sandpaper they used they should have paid the PST on (and not charged through to the final customer).

Other sandpaper they used they should not have paid PST on and charged the final customer the PST.

It was weird and stupid.

Hopefully the PST won't come back because the HST has some weird and stupid rules but nothing as bad as that.

Weird and stupid rules can be applied to any tax. You can clean up the weird and stupid rules without getting rid of the tax. Who's to say the HST rules won't get weirder and stupider as time goes by.

ToadBrother · June 20, 2011

Weird and stupid rules can be applied to any tax. You can clean up the weird and stupid rules without getting rid of the tax. Who's to say the HST rules won't get weirder and stupider as time goes by.

This is a bizarre condemnation. As a general rule, the attractiveness of VATs is the limitations on exemptions. In fact, a perfect VAT would have no exemptions at all. This exact complaint could be levelled against the PST as well, or any tax you like. The logic is so inherently flawed surely even you can see it.

Who's to say that if you vote to extinguish the PST that the Province won't turn around and turn it into a VAT? It's the sensible thing to do, the advantage of harmonization with the GST is that you make cheaper for both government and business to administer the tax. There's nothing stopping the PST from being turned into a VAT, save perhaps for the warrior forces of the Delaney-Vanderzalm machine, but the idea of a California-style democracy that they seem to want to turn the citizen's initiative legislation into is another debate entirely.

The fact is that, despite some redistribution as far as who pays the taxes, VATs are superior in almost every way. They are cheaper to administer, have much more simplistic rules at both sides and are much fairer overall in that they do not discriminate between goods and services (hence the Value Added notion). Almost every industrialized jurisdiction out there is, one way or the other, abandoning PST-style sales taxes. I'd argue that if a jurisdiction began filling their VAT tax code with exemptions and other complicating rules that it would cease to be a VAT. Further, any new changes to the HST would require both Federal and Provincial approval, so there is a check on the unilateral powers of either body to make changes to the HST. Look at the GST, there have been substantial changes to it (other than the tax rate) since it was brought in twenty years ago.

Beyond that, the Province will move to make business pay more by killing some of the business/corporate tax cuts, so some of that redistribution is being reversed.

Edited June 20, 2011 by ToadBrother

Wilber · June 20, 2011

This is a bizarre condemnation. As a general rule, the attractiveness of VATs is the limitations on exemptions. In fact, a perfect VAT would have no exemptions at all. This exact complaint could be levelled against the PST as well, or any tax you like. The logic is so inherently flawed surely even you can see it.

It's not bizarre at all, it is a natural tendency of governments and bureaucracies.

ToadBrother · June 20, 2011

It's not bizarre at all, it is a natural tendency of governments and bureaucracies.

And yet, other than two drop the GST rate, the Federal Government has not meaningfully messed with the GST in twenty years. In fact, so far as I'm aware, anywhere there is a VAT, the only thing that ever changes is the rate. Like I said, the whole point of a VAT is simplified rules and administration. You're just fear mongering now.

Wilber · June 20, 2011

And yet, other than two drop the GST rate, the Federal Government has not meaningfully messed with the GST in twenty years. In fact, so far as I'm aware, anywhere there is a VAT, the only thing that ever changes is the rate. Like I said, the whole point of a VAT is simplified rules and administration. You're just fear mongering now.

I'm not fear mongering, just pointing out that you can make any tax more complicated. If as you say, a perfect HST is one that has no exemptions at all, it has been complicated already by the province, with more complications to be added later on.

ToadBrother · June 20, 2011

I'm not fear mongering, just pointing out that you can make any tax more complicated.

Of course you're fear mongering. I could point out that the PST could be made much worse too and use that as an argument to vote No to extinguishment. Your claim holds no utility whatsoever.

If as you say, a perfect HST is one that has no exemptions at all, it has been complicated already by the province, with more complications to be added later on.

I'm not sure a pure VAT exists anywhere. But if you compare the rules surrounding GST/HST and the PST, which do you suppose is more complex?

Edited June 20, 2011 by ToadBrother

gutb · June 20, 2011

Well, going by the polls it seems that BC is going to dump the HST -- however, it's plain sad that it will not be voted out by a super majority. Close to half of BC voters believe that the HST is better than PST/GST, I can't even wrap my mind around how deliriously scrambled with propaganda one would have to be to believe that.