Sheâ€™s back â€“ the ex-girlfriend we just canâ€™t put behind us. Yes, the spectre of the Harmonized Sales Tax (HST) still looms over our tax system, a full year after it was scrapped.
As predicted last January, memories of the HST have indeed continued to pop up at the strangest times. The most recent reminder comes from eagle-eyed taxpayers filling out their income tax forms. These sticklers have noticed a stealthy tax increase due to a reduction in the basic personal amount (BPA) â€“ the threshold amount Canadians are able to earn before having to pay income tax.
Since 2012, B.C.â€™s BPA has dropped from $11,354 to $9,869. Meaning, you now pay taxes on that extra $1,485. If you add in the lowered spousal amount tax credit, the average family is paying an extra $168.81.
Thatâ€™s on top of other provincial tax and fee increases.
Compared to just five years ago, British Columbians now hand over an extra $20 bill every week of the year to the provincial government. This is the biggest jump in the country.
This is a hangover from the HST. When the legislation was repealed, the BPA increase that had been brought in 2009 went with it. If the HST had stayed in place, the BPA would likely be $11,524 this year.
The B.C. government should address B.C.â€™s low BPA. Two provinces to which B.C. is losing population, both have far higher amounts: Albertaâ€™s is $17,787, while Saskatchewanâ€™s is $15,378. Even the federal threshold is $11,138.
The basic personal amount isnâ€™t the only time the HST comes up in conversation. Rarely does a week go by at the Canadian Taxpayers Federationâ€™s B.C. office without an email or phone call on the private car sales tax.
When the HST came into place, the province passed a second piece of legislation that slapped a 12 per cent sales tax on â€œdesignated propertyâ€ â€“ private vehicle and boat sales. The referendum overturned the HST legislation, but not this other tax, much to the dismay of people buying vehicles from one another. The PST on those cars and boats must be paid, even if it is a gift.
Small businesses are also still trying to come to terms with the new Provincial Sales Tax rules. A fireplace company told us recently that they are forced to charge different amounts of PST depending on whether they install the fireplace or not. If itâ€™s a retail sale, meaning the buyer takes it home themselves, the customer pays PST on the fireplaceâ€™s entire sales cost. But if they get it installed, the company only needs to charge the customer the tax on the wholesale cost of the fireplace.
Complications like this make it very difficult for companies to track sales costs and communicate accurate pricing to buyers.
Did repealing the HST save taxpayers money? Everyoneâ€™s individual situation is different, so it will depend on what kind of consumer you are.
The governmentâ€™s own budget documents show that in 2012, a family making $60,000 a year paid $1,262 in the provincial portion of the HST. In 2014, that same family paid $1,091 in PST, a savings of $171 in straight sales tax â€“ incredibly close to the $168.81 paid in extra income tax due to the BPA and spousal reductions.
B.C. and the HST broke up a year ago. While the May 2013 election cleared the decks of the political consequences, the struggle to get past all the other weird wrinkles of the HST era continues. The ex is still with us, and may be for some time to come.
Jordan Bateman, Langley
B.C. Director of the Canadian Taxpayers Federation