What is Harmonized Sales Tax?

Living on the border with British Columbia, I have been hearing a lot lately on CBC Radio about the upcoming BC “Harmonized Sales Tax”. I understand it is going to be 12%, go into effect in 2010 and that there are numerous protests going on around the province against the tax. What I haven’t heard (and can’t seem to find on the interwebs) is a definition. What does “harmonized sales tax” mean in this instance? :confused:
Any canadians out there who could enlighten me?

Wikipedia seems to know a lot about it… http://en.wikipedia.org/wiki/Harmonized_Sales_Tax

In Canada, the Harmonized Sales Tax (HST) combines the Goods and Services Tax (GST) and Provincial Sales Tax (PST) into a single sales tax.[1]

It’s just combining the federal and provincial sales tax into a single tax. It’s supposed to simplify accounting for businesses but (generally) does away with special rates for certain goods. Ie the PST rate may be 5%-10% depending on the item now, but will become 7% (bundled with 5% GST) on every item with harmonization.

Wait a second here…you guys have a large income tax, right? and 12% TWELVE PERCENT sales tax!!!

WTH you guys spending the money on…wars of aggression?

Universal health care, of course!

They have “free healthcare” in Canada… now you know how they pay for it.

Thanks. I looked at the Wikipedia article, but it made no sense to me (possibly because I know nothing about how Canadian sales tax works to begin with). And the CBC broadcasts I heard almost made it sound like an entirely new tax. Between the two, they had me very confused.

In all seriousness… :smiley: Does Canada have property taxes? I could see 12% sales tax if no property taxes…

You do realise that Canada has relatively similar levels of taxation to the US? It varies from province-to-state but the total percentage of income given to the state is approx 35%

Property taxes tend to be used by municipalities and school boards, but not the federal or provincial government. Sales taxes and income taxes are the major sources of revenue for the federal and provincial governments.

I did not know this…and have heard otherwise (though I haven’t been curious enough to check it out)

Is this true?

Just to add, we also don’t have city and/or county sales taxes, as I understand happens in parts of the US.

BTW, no provincial sales taxes in Alberta, so we’re only dinged 5% for the GST at point of sale. Sales tax doesn’t have to be 12%–it all depends on the province one lives in.

Nitpick: the GST is not a sales tax; it’s a value-added tax. It applies throughout the supply chain, not just at final sale. I don’t know a lot about the HST yet, but I suspect I Will, because Ontario is talking about it too. In Ontario, the provincial sales tax is 8% and the GST is 5% as it is nationally.

The Federal Government brought in the GTS to replace a “hidden” tax of 13.5% on a suit of goods and an 11% telecommunications tax. Since the tax was applied to a wider range of goods and services it came in at 7%. The interesting thing is that the earlier taxes were built into the cost of the goods. The GST, on the other hand is right there looking at you and you are very aware of how you are being taxed. I quite like that.

Now each province is allowed to raise taxes as well, just like various states. A provincial tax rate of 7% tied to a 5% GST value gives you 12% on all purchases. The HST aims to simplify the administration of the taxes and thereby drive the cost of adminstrating the tax down. Personally I’m not sure it’s wise for provincial governments to give up a revenue mechanism but that’s a GD thread.

Municipalities rely exclusively on property taxes and funding from the provinces and are not allowed to impose a tax.

Does a harmonized sales tax prevent the province from changing its share of the tax? What would prevent B.C. from saying, “As of tomorrow, the HST is 13%”?

Not really, no.

PST is pretty much either 7% or 0% right now. 0% (PST Exempt) applies to things like kids clothes, Books, used clothing, patterns for clothes, insulation, smoke alarms,bicycles, home heating oil/natural gas, safety equipment and energy efficient appliances.

PST is also not Currently payable on services such as things like Legal advice, haircuts, restaurant meals etc. etc.

The new HST (as others have said) will harmonize the two taxes, and will effectively put everything in the PST exempt category into the full HST category. Thus instead of paying 5% GST only on kids clothes, Books, used clothing, patterns for clothes, insulation, smoke alarms,bicycles, home heating oil/natural gas, safety equipment and energy efficient appliances, Legal advice, haircuts, restaurant meals etc. etc. etc., we will now pay 12%

Winners? Big businesses, especially oil and gas/forestry and other donors to the BC provincial liberals.

Losers? Small business, especially food services, and the consumer, who will be paying more taxes than before.

I believe they could do this quite easily, as long as the federal govt still got their 5% of the 13%. Probably pretty trivial to make this change.

Is that so unusual? California has an income with the highest bracket of 9.3%, and sales tax that amounts to about 9% in most places, this is on top of federal income tax. There’s also a very significant property tax almost everywhere yet the state is broke.

In Ontario right now PST on most items is 8%, hotel rooms are 5%, alchohol is 10% and of course there are PST exempt items. And I’m sure there are more exceptions out there.

Technically, you’re correct; although it’s my understanding a series of GST credits and rebates and other mechanisms means that it’s the consumer–the last person in the chain–who pays the full cost of the tax without being able to pass it along to anybody else. I’d guess that semantics about “value added vs. sales tax” don’t matter to the consumer who’s shelling out 5% GST (plus applicable PST) over the advertised price at the counter for a cup of coffee and a muffin.

I’ll admit, I’m not keen on adding the various taxes at point of sale. It just doesn’t seem right to advertise a price, but refuse to deliver it to the consumer unless the consumer pays a higher price because of the taxes added at point of sale. Knowing the amounts of the various taxes does me, as a consumer, no good; unlike a business, I cannot claim back any GST credits for what I’ve paid. And having travelled to places that bundle the VAT into the advertised price, so the price you see is the total price you pay, just makes more sense to me. No skills in mental arithmetic are required to know if you can afford something.