The Fast Facts on the
Harmonized Sales Tax (HST)

The B.C. HST is a value-added sales tax that combines the seven per cent provincial sales tax (PST) with the five per cent federal Goods and Services Tax (GST) resulting in a Harmonized Sales Tax (HST) of 12 per cent. Here are the fast facts you need to know…

Updated: August 26, 2010

The HST is a value-added sales tax that combines the seven per cent provincial sales tax (PST) with the five per cent federal Goods and Services Tax (GST) resulting in a Harmonized Sales Tax (HST) of 12 per cent.

Here are the fast facts you need to know as a British Columbian and as a consumer.

 

What changes under the HST?

• The HST applies to the same goods and services as the GST with some important exceptions. All of the following items are exempt from 7% of the HST:
• Gasoline
• Home energy use
• Books
• Children's-sized clothing and footwear
• Children's car seats and car booster seats
• Diapers
• Feminine hygiene products
• All existing GST exemptions continue to apply (i.e.; there is no tax on basic groceries).
• The Social Services Tax is eliminated reducing tax from 15% to 12% on liquor served on site at restaurants and pubs.
• According to the Fraser Institute, as a result of the offsetting personal income tax reductions the HST essentially has no impact on the total tax bill paid by the average family and no impact on BC’s Tax Freedom Day.
  

What are the benefits of the HST?

• Under the PST, taxes were hidden in the production of goods resulting in higher prices, less investment, and fewer jobs.  Under the HST, hidden PST is eliminated saving B.C. businesses $2 billion resulting in more investment, jobs, higher wages and lower prices.
• The federal government provided B.C. with transitional funding of $1.6 billion that protects vital health and education services.
• B.C. taxpayers save an estimated $30 million annually in administration costs.
• The single sales tax makes B.C. one of the most competitive jurisdictions in the industrialized world for new investments.

What rebates are available for a new home purchase?

• For new construction, a partial rebate ensures that new homes up to $525,000 bear no more tax than under the current PST system, while homes above $525,000 receive a flat rebate of about $26,250.  There is no HST on previously-owned homes being re-sold.

What does the HST mean to low income families and seniors?

• For low income families and individuals, a refundable B.C. HST Credit is paid quarterly to help offset the impact of the tax.
• The amount of the credit is $230 per family member for individuals with income up to $20,000 and families with incomes up to $25,000.
• The credit benefits over 1.1 million British Columbians, and when combined with the existing low income Climate Action credit, a single individual earning $20,000 will be eligible for up to $335 in credits. 
• Effective January 1, 2010, all taxpayers received a personal income tax cut with an increase in the basic personal exemption from $9,373 to $11,000, an increase of 17%.

What rebates are available for municipalities and charities?

• There are rebates of the provincial portion of the HST for municipalities, charities and eligible non-profit organizations to protect the sector from paying additional tax.

Who supports the HST?

Most leading Canadian economists and think-tank organizations support this move.  In addition, numerous provincial organizations have come forward voicing their support for this change, including:

• The B.C. Chamber of Commerce
• The Retail Council of Canada
• The B.C. Business Council
• The B.C. Progress Board
• The Chartered Accountants of British Columbia
• The Canadian Manufacturers and Exporters
• The Council of Forest Industries
• The Mining Association of British Columbia
• The BC Trucking Association
• The BC Roadbuilders Association
• The Motion Picture Production Industry Association of British Columbia

These are more than just organizations – they represent hundreds of companies, employers, and thousands of workers. This is the single biggest thing we can do to enhance their competitiveness, allowing them to protect and grow jobs and wages in our communities – many of which are in rural British Columbia.