On July 1st, 2010, British Columbia’s provincial sales tax (PST) will be integrated with the federal Goods and Services Tax (GST) creating a single harmonized sales tax (HST) of 12 percent—a 7% provincial portion and 5% federal.
Many British Columbians have been led to believe that harmonizing the PST with the GST will significantly increase the total taxes they pay. It is hard to blame them for holding this view. After all, the words “tax increase” and “HST” have appeared together in over 177 articles in BC newspapers over the past year.
This Alert provides an empirical measurement of the impact of the HST on the average British Columbian family. The Fraser Institute is well suited to provide such an analysis; it has a long history of measuring how much tax, in all forms, British Columbians pay. For example, the Fraser Institute annually calculates and publishes the most popular and easily accessible measure of the total taxes Canadians pay: Tax Freedom Day.
Using the Fraser Institute’s Canadian Tax Simulator, which is based on Statistic Canada’s Social Policy Simulation Data base and Model (SPSD/M), this Alert measures the total amount of tax the average British Columbian family will pay under the HST versus the status quo PST. It also examines how the implementation of the HST will affect Tax Freedom Day in British Columbia. The Alert concludes by examining the impact of the HST on BC families at different income levels.