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 HST Means Harmony for BC Tech Community
Is the Harmonized Sales Tax (HST) a good tax policy for the BC Hi-Tech community? Politics aside, the answer is yes.
Provincial sales tax (PST) is embedded within the price of goods and services as a hidden tax, and it is applied to the sale of all goods regardless of the purchaser or its use. Value-added taxes like HST reduce the tax load on businesses. The implementation of the HST will eliminate taxes on productivity, replacing them with taxes on consumption. The HST will make our industry more competitive and attractive for new investment in BC, which will result in higher growth rates and more jobs.
Implementing the HST removes the PST from "inputs" or the goods and services that BC companies purchase in order to carry out their own business. Approximately 40% of all PST revenue (approximately $2 billion annually) collected by the BC government is paid by businesses on a plethora of "inputs" used in producing goods and services (e.g. computers, equipment, vehicles, office supplies, furniture, fixtures, legal services).
Replacing the PST with the HST will remove a large impediment to investment. More investment encourages new technologies and increases innovation, which feeds ongoing productivity improvements. As long as BC continues to be a leader in innovation and productivity improvement, we will see continuous growth in our standard of living. Removal of the PST is an incentive for BC’s hi-tech industry to upgrade their equipment and make investments in training, product development and innovation. This will ultimately generate spinoff activity resulting in job creation.
The HST is a shift of the overall tax burden toward consumption and away from business production. While the PST, currently paid on business inputs, can’t be reclaimed by business, the HST can be. The implementation of the HST is good news for the technology industry because not only will input costs decrease but the administrative overhead of managing two separate tax systems will be eliminated. There is plenty of evidence in Canada, and around the world, that a value‐added‐tax, like the HST, is more efficient and increases economic competitiveness and productivity.
The introduction of the HST will result in increased business investment (can you say jobs?) and a slightly lower average cost of goods and services. Is the HST a good tax policy for the BC Hi-Tech community? Absolutely!
By Colin Farrell, Corporate Recruiters Ltd. Colin can be contacted at colin@corporate.bc.ca
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