HST provinces see hiccups in early going
BRITISH Columbia and Ontario recently achieved tax notoriety with the introduction of a harmonized sales tax on July 1. Although there were certainly pros and cons surrounding the decision to harmonize, the cons have been considerably more prominent the past few months.
In B.C., former premier Bill Vander Zalm has waged a lengthy fight against the HST, culminating in a petition of more than 700,000 signatures representing over 10 per cent of the registered voters. The courts and the chief electoral officer have ruled this petition to kill the HST valid and organizers are now waiting for the next step in the process.
In fact, Vander Zalm has threatened to recall every Liberal (the party in power) MLA if there is further delay to his petition’s progress. He has asked current Premier Gordon Campbell to conduct a fall vote on this issue.
This could have huge implications for the HST in other provinces currently with the tax or those considering it.
In Ontario, there has been nothing nearly as radical. However, there has been some immediate impact. An article in the Financial Post estimated 75 per cent of all renovation contracts have gone the way of the underground economy as a result of the HST introduction.
The additional eight per cent tax was enough to push an already tax-wary group of clients toward illegal and unsafe renovation practices. So, the On- tario government is collecting a new eight per cent tax on 25 per cent of the business, but losing 100 per cent of the taxes on 75 per cent of the business. There has to be a better way of dealing with the underground economy in renovations.
Back in B.C., the provincial real estate association is gearing up for a campaign against the province’s property transfer tax. It is proposing a phase-out of the tax. B.C. has the highest such tax in Canada; Manitoba has the secondhighest. Winnipeg Realtors have been involved in a similar campaign for the past year.
Some criticize Manitoba for taking the slow, steady approach but, based on what we are seeing in B.C. and Ontario, it appears to be better to do it right the first time rather than rush in unprepared and then have to correct things later. As seen in both provinces, perhaps the best tax is no tax at all.