Opponents of the 12 per cent Harmonized Sales Tax (HST) welcomed the legislation tabled by Premier Christy Clark on Monday that would restore the seven per cent Provincial Sales Tax (PST) and five per cent General Sales Tax (GST) levied by the federal government.
Although there will be some changes in the way that the PST is collected to streamline the tax for businesses, all of the previous exemptions that were in place before the move to the HST in July 2010 will return. The list of exempt items includes food, restaurant meals, bicycles, gym memberships, movie tickets, personal services like haircuts and children's clothing, to name just a few. PST is already being removed from new home purchases and other real estate transactions that were taxed for the first time through the HST.
The legislation has not passed yet, but is expected to soon. The return to PST will happen on April 1, 2013.
"As promised, on April 1, 2013, consumers will only pay PST on those goods and services that were subject to PST before the implementation of the HST," said Minister of Finance Kevin Falcon.
Scott Humby at Fanatyk Co. in Whistler, which sells bikes, welcomed the announcement. Previously there was some uncertainty whether all of the PST exemptions would still apply when the tax was reintroduced.
"Our reaction is that this is good because it's going to stimulate purchasing, and that helps the economy," he said. "And I think it's nice that they're making a tax concession for environmentally sound modes of transportation and public health. (The new tax) promotes public health in terms of battling heart disease and issues like that."
Humby said it's difficult to tell whether the HST had any affect on business, but overnight bikes became seven per cent more expensive — and customers did notice the difference. "So yeah, that's going to make a difference in your purchases," he said. "A lot of people buying bikes can't afford to buy cars, so anything that helps them is good. I don't know why they would take that away."
Escape Route manager Larry Falcon, who organized the local opposition to the HST in Whistler — and is Kevin Falcon's brother — said he was pleased with the province's decision to restore all of the exemptions.
"It's great that they heard the voice of the people and are giving us back what we wanted in the first place," he said. "It's unfortunate that it's taken so long, but the bottom line is that everyone is pleased."
As for the changes to the PST, which will make it easier for business owners, Falcon gave the province full points.
"It's really nice to see that they are tying to make it easier for businesses to work within the PST structure," he said. "That's a really positive thing, and from the province's standpoint, to give them credit, they're tying to make something good out of something bad."
The Whistler Chamber of Commerce was aligned with other chambers across the province in support of the HST, which simplified tax collection for businesses, prevented double taxation on goods and services, and was expected to increase business investment in the province. However, chamber president Fiona Famulak said it appears that the reinstated PST will address many of the issues with the tax that the HST addressed.
"Yesterday's announcement is welcomed and helps to clarify further the transition plans to reinstate PST," she said in a statement. "It appears that the new legislation will be clearer and easier to administer, and will help our businesses comply and reduce costs. In particular, the improvements will benefit our businesses that collect both PST and GST because improved technology will allow electronic submissions and coincident filing dates for both taxes.
"All that said, reverting back to the former tax collection system will have associated costs. Businesses will need to decide if they can absorb those costs or pass them on to consumers come April 2013. We will know more specifics when final proposed legislation is released in the fall."