Harmony Or Discord? BC Announces Introduction Of HST

General Comments

On July 23, 2009, British Columbia announced that it will harmonize its provincial sales tax (PST) with the federal goods and services tax (GST) effective July 1, 2010. This follows the earlier announcement by Ontario in March that it will do so on the same date.

The BC harmonized sales tax (HST) will apply at the rate of 12 per cent compared with 13 per cent for Ontario and the other GST-harmonized provinces (Nova Scotia, New Brunswick, and Newfoundland & Labrador). The federal government will provide BC with $1.6 billion in transitional funding and will assume the administration of the HST.

Application of the HST

The HST will apply to the same tax base as the GST, with some limited point-of-sale rebates on the provincial portion for a few products, including children's items, gasoline and diesel fuel for motor vehicles. BC will also introduce temporary restrictions on input tax credits in respect of the provincial portion of the HST, for