Chapter 6- Harmonized Sales Tax

http://www.fraserinstitute.org/newsandevents/commentaries/6815.aspx

Summary
This article reports that that the Finance Minister Colin Hansen announced that BC will replace its PST with a single Harmonized Sales Tax (HST) in the beginning of July 2010. The HST benefits businesses by ending business inputs, decreasing the cost and the tax penalty on new business investments. It will also make BC more encouraged in investments, more business competition and it will provide long term benefits to British Columbia. While the PST(current tax seven percent tax) applies to businesses, this greatly increases the cost of machinery and this cost causes business development to become more expensive than needed. From the harmonizing tax businesses will also benefit from reduction in unproductive tax-compliance costs. The only problem is that the delaying of supplements until mid-2010 can cause businesses to hold back from major purchases and this wouldn't be helpful to the economy.


Connections
The connections with this article and chapter 6 is that the seven percent PST and five percent GST will be replaced by the new Harmonized Sales Tax. This will affect the way which accountants do their books, which means there will no longer be separate documents for the Provincial Government and Federal Government. There will be less work involved for the accountants because instead of needing to separate the two sales taxes and worrying about the GST recoverable, they can just record the taxes as one and all the procedures for doing the taxes would be easier to keep track of. Therefore business owners can easily save money and time from all the paper work and complicated procedures.

Reflection
In my opinion the new Harmonizing Sales Tax will benefit business because they will save a lot of money from not needing to pay the seven percent in tax. But on the other hand the HST would burden on consumers because almost everything they purchase from mid-July will be increased by seven percent.The enforcement of this taxes may cause consumers to hold back from buying things other than the things that are essential for them. When there is less consumers in the market the economy may begin to fall and led into something similar to the depression.