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.
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I do not like the Harmonized Sales Tax. For consumers the tax is vexing because now no one can go around paying their taxes, and the cost of items seem to increase. People usually look at the total price not how much the shirt actually costs. So I think less people will spent money. Because less people will be willing to buy the same things for more, some business will lost money or have to lower their initial price so that even withb the HST the total amount paid is the same. This way the business will still lose money.
ReplyDeleteJENNIFER WONG
I agree with you in that any benefit that businesses could get from having the HST would be offset by the decreasing amount of consumer spending on their products and services. I also think this is the worst possible time to introduce the HST since Canada seems to be on he road to economic recovery. Although the BC government already said that they will be going through with the HST, they should wait until Canada is fully in the green before implementing the HST. This would benefit BC because it would be more competitivethe market.
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