People have lots reasons to be upset about the Harmonized Sales Tax (HST). For starters, it means the price of many goods and services will be 7 per cent higher. Of course, the government assures us this will only be at first. They claim businesses will pass cost savings along to consumers because they will no longer pay the provincial sales tax (PST) on their business inputs. Many citizens are skeptical about whether businesses will lower prices. However, what citizens should really be skeptical about is whether the prices for services the government provides will go down. So far it seems it will be government, not business, ripping-off consumers.

One example is the PST on liquor in restaurants, which will fall from 10 to 7 per cent. Will this mean a price reduction to hard-pressed consumers? No, the government will increase the wholesale mark-up on alcohol to keep its revenue the same. So tipplers will see no savings when the HST arrives -- no harmonization-induced price reduction here, folks.

Taxpayers were also supposed to say goodbye to the 7 per cent parking sales tax that goes to TransLink, the Lower Mainland's public transit Leviathan. The government said that tax would be repealed with the implementation of the HST, and "options for TransLink related to the removal of the parking tax are being reviewed."

That not only led the naïve observer, but TransLink Chair Dale Parker to muse about what TransLink would do once it no longer had the 7 per cent parking sales tax to count on for revenue.

So imagine the shock and awe when the Ministry of Finance announced in December that the PST on parking in TransLink’s region would triple from 7 per cent to 21 per cent. 

But, wait a minute! Wasn't the PST on parking supposed to be eliminated? Oh no, explained the finance ministry. The PST on parking isn't really a PST (even though it’s covered in the Social Services Tax Act, otherwise known as the PST legislation), it’s a tax collected by the province for TransLink, so it doesn't fall into the PST cuts originally announced, even though they in fact, did announce it. 

If you are not already a bit befuddled by this, hold on to your wallet. According to federal GST legislation, if a sales tax in B.C. is more than 11 per cent, the 12 per cent HST will be charged on top of it. That means the parking sales tax will not be 21 per cent as originally announced, but 23.52 per cent as of July 1, 2010. Paying HST on a tax? Can you say tax grab? 

But not only will working stiffs and shoppers trying to park in the Lower Mainland pay HST on the parking sales tax, they will pay HST on parking as well, bumping up the total tax paid on parking to 35.52 per cent! 

Theory says that consumer prices should go down once the HST is implemented. Experience tells that when government gets involved, prices go up. The government says it is bringing in the HST to lower costs and make the province more competitive for business investment. But forgetting facts when they are no longer convenient and arbitrarily increasing a tax is the mark of a government out of control. The government must stick with original plan and repeal the TransLink parking tax.

By: Maureen Bader
Posted: January 11, 2010
Topic: British Columbia

Contact the regional director Maureen Bader for further information.

Type: Commentary

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