| HST!
Posted: 7/23/2009 11:58:17 AM | Most of you have probably heard by now that BC is going to harmonize its sales tax with the GST:
http://www2.news.gov.bc.ca/news_releases_2009-2013/2009PREM0017-000141.htm
In other words, instead of paying 5% GST + 7% PST we'll just pay 12% HST. Along with that there'll be a correspondingly larger HST rebate at tax time to replace the GST rebate (for those who qualify, of course).
Aside from the obvious benefit of making everything simpler and cutting administration costs, there's a big hidden benefit here too: it means businesses no longer have to pay PST on expenses.
Thoughts?
This has made my day, personally - a rare outburst of common sense from government. | |
|
| HST!
Posted: 7/23/2009 12:41:01 PM | I dont understand what you mean by not paying pst on expenses?
Right now if you purchase product for resale or for mfg to resell you are exempt the PST and only pay the GST. If they harmonize the taxes to you not pay any taxes or do you alway pay the harmonize tax. To me this looks bad, govt will be collection the extra 7% on all sales from the way I see it.
Remember when the GST came in effect so that the hidden FST (federal sales tax) will no longer be buried into the sale price. Well the FST buried into the sale price was taxed only once at the mfg end and charged only once at time of the first sale. With GST you get taxed everytime the item is sold. For example the old way the FST was part of the purchase price on the new vehicle and you pay PST on top. Now with the GST on a new vehicle you pay it as GST instead of FST and pay PST on top. When you resell the vehicle the Govt again collects GST and PST for as many times as the vehicle gets sold through its usefull life.
Sounds to me like the Govt has their hands in my pocket again. | |
|
| HST!
Posted: 7/23/2009 12:53:37 PM | Actually this is the first I've heard about the tax change.
Thanks for letting us know.
Speaking from a business operator's viewpoint...
I don't have a problem with GST, everyone pays it, what I pay offsets what I collect and I remit the difference.
I pay PST on expenses, for example telephone and advertising.
Only the end user pays PST so when I purchase things to re-sell I provide my PS tax number to be exempted from paying the PST. I then collect PST from my customers (unless they too are exempt). I remit everything I collect less the Vendor's Commission.
I looked at the referenced website and didn't see any mention of the PST Vendor's commission. It looks like I'll be losing that bit of income. | |
|
| HST!
Posted: 7/23/2009 1:05:24 PM |
I dont understand what you mean by not paying pst on expenses?
Aside from products for resale, you do have to pay PST on most other expenses. For a service business, that can mean pretty much all your expenses - computers, furniture, phones, office supplies, etc. Of course, some of these are exempt and others you just deduct as a further expense, but it's a hassle having to keep track of it all. It's doubly a hassle because the PST regulations are clear as mud and I know business owners who have been burned badly by them, figuring they didn't have to charge PST and then getting caught in an audit later for tens of thousands of dollars.
With GST you just total up all the money you spent on Input Tax Credits (translation: GST on expenses) and subtract it from the GST you remit, nice and simple. It doesn't matter if the rate is 5% or 12% since you just pass it all through anyway. All it really means is changing one number in a spreadsheet.
There are a *very* few categories of things where you will have to pay more tax (restaurant bills, particularly). On the other hand, there are lots of indirect savings involved - we're getting rid of an entire government department and the accompanying bureaucracy, after all. Also, the HST rebate the government gives to low-income people will be bigger than the current GST rebate.
Sounds to me like the Govt has their hands in my pocket again.
What is it with you people shouting about tax grabs?? I swear there's probably somebody shouting that the cloudy weather is an attempt by government to squeeze more money from us. In fact, the BC government has been cutting taxes steadily for years (whether wisely or not is another debate). Harmonizing sales tax will save us all money in the long run. Probably there are a few small categories of people here and there who'll be inconvenienced in the process, but that's true of any reform. | |
|
| HST!
Posted: 7/23/2009 1:07:38 PM | I don't see where it's helping me, the consumer - despite what the press release says. Looks like I'm paying 12% on the same stuff I paid 12% on before, except fem hygiene products? Maybe it's a saving for business, but I don't see how it helps me at all. I don't qualify for rebates anyway, unless they're going to increase the amount you can make before getting the tax break.
it means businesses no longer have to pay PST on expenses.
Won't they still have to pay the 12% HST?
I just don't get it. Can someone explain in simple terms how this reduces costs, other than the administration of two taxes by business and government?  | |
|
| HST!
Posted: 7/23/2009 1:45:57 PM | Don't get me started on the service part ...... before GST you never had a tax on services.
Let me do a little flow chart on this hst
Mfg collects the extra tax on materials and remits to govt
Distributor then collects the extra tax when selling to the retailer and remits to the govt
Retailer then charges the extra tax when they sell it to you
Assuming that there is on one level between Distributor and Retailer and the extra tax is the 7% harmonized into the 5% on all sales instead of only GST for resellers I see the govt collecting a lot of extra money.
I hope I miss something here | |
|
| HST!
Posted: 7/23/2009 2:20:23 PM | Mfg collects the extra tax on materials and remits to govt
Distributor then collects the extra tax when selling to the retailer and remits to the govt
Retailer then charges the extra tax when they sell it to you
The distributor and retailer claim the tax back, though (whether GST or HST) so it all passes through:
Manufacturer Matt sells Distributor Don $1000 worth of steel, collects $120 in HST and remits it. Government: +$120
Distributor Don sells Retailer Ray $1500 worth of bolts, collects and remits $180 in HST but also claims back the $120 he spent on HST for his steel. Government: +$120-$120+$180=+$180
Retailer Ray sells you $2000 worth of shelving parts, collects and remits $240 in HST and claims back the $180 he paid in HST on bolts. Government: +$180-$180+$240=+$240.
So at the end, the government just ends up with the amount collected at the retail end of the chain.
Won't they still have to pay the 12% HST?
Yes, businesses still have to pay 12% HST like anybody else, but they can claim it all back again when it comes time to remit their HST. At least, they can if they registered for GST - which is why every small business person should do so even if they don't have to. :) Effectively, GST/HST is "off the books" - it doesn't enter into your regular accounting, and it's often recommended people keep their GST takings in a separate account.
In contrast, when you pay 7% PST it becomes another business expense that gets factored into your accounting as a deduction against income. At the end of all the paperwork you'll probably get practically all of it back, but it's a hassle in between and don't neglect the "probably and practically" bit because there are ways your money can disappear. One small example ... one of my businesses is a .com startup which has been in existence as a company for a couple years now but won't make a cent of profit till sometime in (I hope) 2010. It sure does have a lot of expenses, though, enough to have cost me hundreds of dollars in PST. As it stands, I won't get any of that money back until at least 2011 (and that assumes the business succeeds, which is never guaranteed to say the least). If HST had been in place I'd have got most of that back already and only have about $70 worth of PST outstanding now. | |
|
| HST!
Posted: 7/23/2009 2:28:38 PM | ^^^
In contrast, when you pay 7% PST it becomes another business expense that gets factored into your accounting as a deduction against income. At the end of all the paperwork you'll probably get practically all of it back...
You, as a business operator and registered collector of PST do not get back any PST you have paid on goods or services you need to operate your business. It is essentially another business expense, just like electricity, rent, advertising, etc.
If you are paying PST on things you re-sell you should try to avoid that in the first place, by providing your PST number to the vendor. Only the end-user is to pay PST. | |
|
| HST!
Posted: 7/23/2009 2:37:54 PM | You, as a business operator and registered collector of PST do not get back any PST you have paid on goods or services you need to operate your business. It is essentially another business expense, just like electricity, rent, advertising, etc.
Yes, you're right, I should have phrased that differently. In the end, PST shouldn't in theory be costing you anything extra because it's still deducted against income for the purposes of figuring other taxes and presumably you charged extra to make up for the tax you had to pay (in theory, again).
You're not getting PST back in any sense but, on the other hand it's not true that replacing PST with HST will save you the whole 7% either. The hassle involved in it all is probably as good a reason to get rid of it as the actual savings.
Ex. With HST I might pay $100/year on expenses, claim back $100 per year, nothing to think about. With PST I might pay $70 (because some of my expenses are PST exempt even though not for resale), and in theory I should have added $70 to my fees somewhere to make up for the extra PST. In practice ... well, obviously I do think of that money as gone because that's why I was so happy about the change to HST! | |
|
| HST!
Posted: 7/23/2009 3:02:04 PM | ^^^ thanks Traveller
I've been zero rated for gst but could not deduct pst in the past..
Will look into that how it will affect my bus.
Have a great weekend | |
|
| HST!
Posted: 7/23/2009 3:44:29 PM | nice chat topic......lol | |
|
| HST!
Posted: 7/23/2009 5:10:02 PM | Here are some of the things currently exempt from PST
home fuel
basic cable & telephone
movies
newspapers
magazines
restaurants
domestic air travel
When the HST comes into effect you will be paying the additional 7% on these items as well.
Sounds like its going to take more money of my pocket and your pocket.
 | |
|
| HST!
Posted: 7/23/2009 5:26:50 PM | AHA . . . Finally, I know what a chat topic is. It is a topic that only a very few posters are interested in and so it becomes a chat topic. At least, the big, big hammer did not fall on this thread.
Actually, I think BE's post ^ opens this up to more posters. Now, that I know what he has listed above is going to be effected, I am not very happy about it.
Our provincial government is like a vacuum cleaner when it comes to taking money out of the average citizens pocket. It should come as no surprise. | |
|
| HST!
Posted: 7/23/2009 8:00:20 PM | This is what I was getting at as a mfg I buy $100 worth of material and pay the extra 7% on so now it costs me $107 of material. I mark it up say 35% so I sell the finished product to the distributor for $144.45. He pays $144.45 plus the extra 7% and marks it up again 35% so he sells it to the retailer for $208.66. The retailer now pay pays the $208.66 plus the extra 7% and adds his 35% and the consumer pays 301.41.
The way we do it now I buy $100.00 worth of materail pay no pst (the 7%) mark it up 35% and sell it to the distributor for $135.00. Since he is purchasing for resale he is not paying pst so when he marks it up 35% he is selling it to the retailer for $182.25. The retailer then marks it up 35% and the consumer pays 246.04.
This is going through only 1 distributor when in actual fact goods go through multiple distributors before the consumer.
Is this not right? | |
|
| HST!
Posted: 7/23/2009 9:25:45 PM |
Is this not right?
No. See above for how the accounting works under GST/HST. That's not theory; it's how we actually do things now. HST doesn't change the way GST works; it's just a different rate.
Maybe more to the point, how much we resell goods/services for usually has a whole lot more to do with market(ing) factors than any percentage markup formulas.
Our provincial government is like a vacuum cleaner when it comes to taking money out of the average citizens pocket. It should come as no surprise.
Maybe I should get myself one of these selective memories so I can ignore reality too.  Meanwhile, here are some facts to annoy the rest of you:
BC income tax rates in 2004 were 6.05/9.15/11.7/13.7/14.7 percent. In 2009 they were 5.06/7.7/10.5/12.29/14.7 percent. Notice the cuts? That's on top of raised allowance levels plus further tax-cuts from 2001-2004, plus whatever they cut it by in 2010 and the addition of extra credits as well. That adds up to a lot less tax we're paying now than in 2001 (over 35%, if you believe government sources). If we pay back a little bit of that in carbon tax and HST, so what? There are good sound reasons for both: simpler and broader-based taxes are a good thing.
There are a lot of perfectly valid criticisms you can make of the Liberals - BC rail corruption, blatant mismanagement of transport policy, selling off our natural resources to cronies, etc. But this whole "tax grab" notion must be among the stupidest of all the stupid complaints I've heard, because it just so obviously flies in the face of all the facts.
Where do people expect this kind of whining to go? When you complain about every single thing the government does, you shouldn't be surprised that they lie to you and manipulate you like children. What other realistic possibility is there when people are impossible to satisfy?
home fuel
basic cable & telephone
movies
newspapers
magazines
restaurants
domestic air travel
Remember, we don't know everything that will be exempt under HST. All we've heard so far is this:
Similar to PST exemptions, the B.C. HST will provide consumers with point-of-sale rebates on a number of products including gasoline and diesel fuel for motor vehicles, books, children’s-sized clothing and footwear, children’s car seats and car booster seats, diapers and feminine hygiene products.
Notice it says "includes," suggesting more things than are listed there. If "similar to PST exemptions" is the goal then there might not be any significant difference when it's actually implemented. Personally, I suspect home fuel will be exempt because they seem keen on exempting fuel generally, and most of the rest won't be because they're basically special exemptions that complicate things. We'll find out when they introduce actual legislation.
Sounds like its going to take more money of my pocket and your pocket.
Out of your pocket and my pocket specifically, perhaps. It isn't going to impact the poor because they get a bigger HST tax rebate to make up for it.
How much is all that really likely to add up to? Most of us probably don't spend all that much money on most things on that list. I eat out at least five days a week and love to go to movies, so I'm probably in the category of people most affected by it, and it'd still only be a couple hundred bucks a year in taxes for me - which I'll more than get back if they keep on cutting income tax as they have been.
Everybody wants the place better run but nobody's willing to put up with even a little pain to get there. No wonder BC is so badly-run. Sheesh... | |
|
| HST!
Posted: 7/23/2009 9:39:59 PM | This plan is revenue neutral for the government.
Meaning that in the end they are going to claim the same amount of taxes.
The whole reason for this program being implemented is a tax shift from business to the consumer with the ultimate goal to help businesses be more competitive in the global market.
With the shift of taxes to consumers, it means that we will still pay GST on everything we have always paid it on, and we will now pay PST on everything, as oppose to things like kids clothes, food, etc which are currently exempt.
Those on low incomes will be hit particularly hard by this, and even though there will be an HST rebate, like the GST rebate, it means less money month to month in a families pocket. | |
|
| HST!
Posted: 7/23/2009 9:58:14 PM | ^OK . . . that really sucks! Here the government goes hitting low income earners again.
I consider myself reasonably well informed but I did not see HST coming. This was mentioned on the news tonight - - - that it was not something a lot of people were aware of and that the Liberals actually said they would not implement it if elected
I actually use/purchase a lot of things on the list BE provided so I don't like it. It also sucks if you are in the Newspaper industry because times are tough for the print media as it is. | |
|
| HST!
Posted: 7/23/2009 10:12:31 PM | If ANYONE thinks this is a good idea I suggest you ponder this question.......
Why does any government make any changes to taxation?
For the good of the public?.....nope
The truth is, this may help out businesses with book work but does nothing but INCREASE the publics overall tax.....Just another public screwing is all........
Oh, I forgot to mention, our Premier is getting a gift of 1.6 billion dollars from the feds to implement this system.....must be nice to to know how much it costs to sell the public out'' again'' eh?......
I wonder what Billion dollar monument our government will build itself this time?............. | |
|
| HST!
Posted: 7/24/2009 12:05:30 AM |
BC income tax rates in 2004 were 6.05/9.15/11.7/13.7/14.7 percent. In 2009 they were 5.06/7.7/10.5/12.29/14.7 percent. Notice the cuts?
Just thought it needed repeating.
Everybody wants the place better run but nobody's willing to put up with even a little pain to get there
True, but then again the news release does say there will be savings passed on to the consumer, and I don't see that happening really. It'd be nice to think that businesses would look at their bottom line and say "Gee, we've saved so much by not having to administer two taxes, lets reduce our prices" but I think its more likely to be more like "Gee, thanks to the change to HST, our profit has increased this year. Isn't that great!"
But anyway, I guess that creating a better business environment is good for most people. | |
|
| HST!
Posted: 7/24/2009 12:36:35 AM | Soooooooooooooooooooooooooo...... new math eh?
we pay this combined .....more friendlier to do math on the tax...so harmonized... I like it...it sounds soooooooo Zen eh?
so...we pay our 12%....and the Feds and the Province of BC do the math later and take their pound of flesh ....gotcha!
New Name + New Math = SAME NUMBER | |
|
| HST!
Posted: 7/24/2009 6:10:52 AM | How can anyone get excited about a different way to pay 12% tax?
Wow. The government really has you pegged | |
|
| HST!
Posted: 7/24/2009 7:39:26 AM | I'm surprised that more people can't see through this, it is a tax grab, no doubt about it. Balled Eagle is right, we will be paying 12% HST on many items that we used to pay only used to pay GST on.
Governments do not generally change taxes unless there is a benefit to the government coffers. The claim that it is revenue neutral is BS, they will get more money out of individuals than they currently get out of companies, which can currently claim PST exemptions .
Yes lower income families will get tax credits, but we don't know how much, probably not enough to cover the extra expense of the new tax. I am of the opinion this is a tactic to shift a heavier tax burden on to the middle class again while claiming that there is a big benefit. The benefit is for businesses, not individuals. So yes they may be truthful about businesses benefiting, however I fail to see how it is going to do anything to create jobs and stimulate the economy as it claimed. | |
|
| HST!
Posted: 7/24/2009 7:45:50 AM | My husband used to be able to claim PST exempt transactions due to his Aboriginal status. How are they going to figure that one out?
As the end 'consumer', I can't "write off" any of the PST/GST expenses and make too much to claim the GST rebate. I'd be interested to see how this would work for me at tax time.
When you buy a used car privately, you currently are paying 7% PST but no GST on the declared purchase price. Is this going to be 12%, too? Gawd, I already see so many people lying through their teeth to dodge the 7% tax......
This is going to be good.... | |
|
| HST!
Posted: 7/24/2009 8:28:29 AM |
Maybe more to the point, how much we resell goods/services for usually has a whole lot more to do with market(ing) factors than any percentage markup formulas
I must be really stupid because I still can not see how this is good for us and how much we pay for product does factor on what we resell it for. Thats why we have to calculate cost of goods plus mark up. | |
|
| HST!
Posted: 7/24/2009 9:27:13 AM | True, but then again the news release does say there will be savings passed on to the consumer, and I don't see that happening really. It'd be nice to think that businesses would look at their bottom line and say "Gee, we've saved so much by not having to administer two taxes, lets reduce our prices" but I think its more likely to be more like "Gee, thanks to the change to HST, our profit has increased this year. Isn't that great!"
I agree that'll happen in the short term. In the long term, competition should push prices down. Even more important...
You have to see this in context. The BC government has already cut our income tax bills quite a bit (especially in the middle tax brackets). I'll be surprised - and a bit annoyed, I admit - if they don't cut it again this year. If they claw a bit of that tax money back in HST, does it really matter? A broader tax base is a good idea; sales tax is much harder to cheat on than income tax, for one thing.
The benefit is for businesses, not individuals.
The "businesses" in question are not faceless evil foreigners in grey suits. They are your neighbours, and probably at least 4 or 5 regular posters in this forum. We pay the same personal taxes you do, including HST. The difference with this is that now we're not paying extra compared to everybody else. Less cost for us also means (eventually) less hidden cost passed on to you. That's the point of it all. Taxing at the end of the supply chain is inherently simpler and more fair.
Over a million people in BC run or work in small businesses, and they're probably the ones who'll benefit most. I'm thinking particularly of a couple small local restaurants I eat at which have been struggling for a while. A difference of a few percent to their expenses will be real good news for them; their margins are tight enough that they never quite rustle up the spare cash to hire another person, redecorate, expand, etc. Maybe they can do that with this.
My husband used to be able to claim PST exempt transactions due to his Aboriginal status. How are they going to figure that one out?
Interesting question... I have no idea, but I did stumble across more info on HST this morning:
http://www.fin.gov.bc.ca/scp/hst/
That has links to the actual agreement with the federal government, an FAQ and other stuff. Maybe the answer's in there.
When you buy a used car privately, you currently are paying 7% PST but no GST on the declared purchase price. Is this going to be 12%, too
Nope, you'd pay no tax at all, because HST follows the same rules as GST. Thanks for that - I was sure there must be some examples where ordinary people would pay less tax, but couldn't think of any offhand!
Yes lower income families will get tax credits, but we don't know how much, probably not enough to cover the extra expense of the new tax.
Actually, we do know how much (it's in the link I just posted above): $230 per family member per year.
I must be really stupid because I still can not see how this is good for us and how much we pay for product does factor on what we resell it for.
The point is that you (as a business) are NOT paying GST or HST. You account for it all separately, add up GST collected and subtract GST paid then mail the difference to the government once every year or quarter or month. In between remittances you have paid GST/HST for your expenses but you've also collected more than that on your sales. What you describe with markup is the way things work with PST. GST/HST, on the other hand, takes all the sales tax accounting off of your books.
How can anyone get excited about a different way to pay 12% tax?
I'm not excited about that. I'm happy about paying less PST on my business expenses and at not having to fill in any more PST forms or study confusing white papers trying to figure out if I should be charging PST or not.
Why does any government make any changes to taxation? For the good of the public?.....nope
You can't change anything for the better if you see all change as bad. Cynicism is a pretty cheap substitute for wisdom.
This was mentioned on the news tonight - - - that it was not something a lot of people were aware of and that the Liberals actually said they would not implement it if elected
It's hardly surprising that the media (especially CanWest) are winding up their sock puppets against HST. 
Anyway, here's the answer:
our Premier is getting a gift of 1.6 billion dollars from the feds to implement this system
Getting stimulus money to make reform happen no doubt makes it all much more attractive.
I'm surprised that more people can't see through this, it is a tax grab, no doubt about it. Balled Eagle is right, we will be paying 12% HST on many items that we used to pay only used to pay GST on.
*Sigh* this again...
Look, before all you "tax grab" types start foaming at the mouth, why don't you do a quick estimate of how much you actually spend on those things on the list and how much extra this will really cost you? For me it's a couple hundred bucks a year tops. That's probably way above average since I eat out practically every day. Since I've saved way more than that in income tax cuts alone (nothing to do with business taxes at all) that means I'm still ahead and the rest of you likely will be too. | |
|
Home
login 
