British Columbia

Replace PST — but not with HST — say B.C. business leaders

The B.C. Chamber of Commerce is calling on the provincial government to replace the PST and with a new tax — but they are not calling it the HST.

VAT would be a made-in-B.C. solution to tax problems, says Chamber of Commerce

Former British Columbia premier Bill Vander Zalm, centre, was one of the key leaders in the fight against the unpopular HST. (Darryl Dyck/Canadian Press)

The B.C. Chamber of Commerce is calling on the provincial government to replace the PST and with a new tax — but chamber members are not calling it the HST.   

Instead, the business leaders are calling for a "value added tax."

"Our members are not looking to revisit the HST or the debate that went in to harmonizing with the federal sales tax," said Dan Baxter, the chamber's director of policy development.

The unpopular HST was brought in by former premier Gordon Campbell after the 2009 election, and was eventually dismantled after it was rejected in a referendum in 2011.

Campbell resigned before the referendum, and his replacement, Christy Clark, brought back the PST, much to the regret of many businesses which benefited from the more streamlined HST.

The province announced in February it plans to update the PST to address some of the concerns. Details on how the tax competitiveness review will work are set to be announced soon.

But already the chamber is proposing scrapping the PST once again, and replacing it with a "made-in-B.C. value added tax" or VAT.

Baxter said unlike the HST, which was run by the federal government, the proposed VAT would not be harmonized with the federal GST, meaning it could be tailored more to the needs of B.C.

"We could craft it here in B.C. in ways that work for British Columbians."

VAT would streamline taxation

Business leaders say the PST, which came into effect in 1948, can be charged to businesses several times during the manufacturing process.

For example, someone making a desk would pay tax on the wood and for the work being done in the mill.

"You are paying PST on PST on PST on every step of production, and that really hurts our competitiveness," said Baxter.

In contrast, the proposed VAT would be paid by businesses just once, said Baxter.

"It would just be one value added tax at the end and would allow businesses to recoup and invest it back into their businesses," he said. 

The chamber also says the PST penalizes investments in new technology and equipment.

"Right now, our tax system penalizes our businesses for investing in the new technologies and equipment that position us to compete globally – and that's concerning for our whole economy," said Maureen Kirkbride, the chamber's interim CEO.

The chamber is also hoping to avoid one of the major mistakes that sunk the unpopular HST  — a lack of public consultation.

"It is going to be something that is made here in British Columbia and hopefully with some dialogue with people here and government," said Baxter.



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