The B.C. Chamber of Commerce didn’t lend its support to the new harmonized sales tax in a vacuum, says its vice-president.

Jon Garson, vice-president of policy development for the B.C. Chamber, spoke to the Cowichan Lake District Chamber of Commerce Wednesday morning to explain its position on the HST.

“This isn’t something where we sat down in Vancouver and decided to support, this is something you (member chambers) asked us to support,” said Garson. “So we have been advocating this since 2002. In 2008 we made this a priority of the B.C. Chamber.”

With the harmonized sales tax, the federal goods and services tax and the provincial sales tax are merged, effective July 1; the HST combines the five per cent federal GST with the seven per cent provincial sales tax.

The provincial government says it will remove more than $2 billion in costs for B.C. businesses, including an estimated $1.9 billion of sales tax removed from business inputs, “which enhances competitiveness, increases investment and productivity and, ultimately, increases prosperity.”

It will extend provincial sales tax not just to restaurants but a wide range of previously exempt services. It will also add seven per cent to utility bills, funerals, hair care, dry cleaning, real estate fees, movie tickets, accounting, photography, home care and domestic airline fares.

Some exemptions include a partial rebate for motor fuels, which are subject to the escalating carbon tax as well as federal and provincial sales taxes. Books, children’s clothing, child car seats, diapers and feminine hygiene products will be exempt from HST as they currently are from GST.

“It’s a true value-added tax,” said Garson. “It’s a tax shift to the consumer. It will follow the GST in application. Every advanced country except the U.S. has a similar harmonized tax system.”

Benefits to the province include an annual savings of about $150 million in administration costs, plus a $1.6 billion one-time incentive payment from the federal government. He added that there may be a small cost to businesses during the HST transition period.

Garson said that support from the B.C. Chamber of Commerce doesn’t mean it’s immune to the concerns from the industries that will be adversely affected, including restaurants, tourism-based industries like hotels, and bed and breakfasts, housing and the service sector.

He said the sector that will be hit by the seven per cent tax increase won’t pay more in taxes, it will be the consumers who will pay it.

“The key question is, where the PST didn’t apply before, how will it affect those businesses,” he said, noting the questions the B.C. Chamber of Commerce will look at include the actual impact of HST, whether mitigation fits the scale of the problem and what are the realistic solutions. He said the B.C. Chamber will support recommendations from impacted sectors if they are supportable recommendations.

Another aspect of the HST that the B.C. Chamber likes, said Garson, is that my 2010 small businesses will not pay taxes in B.C. “That’s one thing the B.C. Chamber has also pushed for,” he said.

Garson said B.C. taxpayers will receive an increase in their personal income tax credit to $11,000 from $9,373 and there will be a full provincial rebate for residential energy.

For Chuck Anderson, owner of Honeymoon Bay Lakeside B&B, the B.C. Chamber’s support for HST comes as a surprise. After the chamber meeting last Wednesday morning, Anderson spoke one-on-one with Garson. “It didn’t make sense to me why they did it,” said Anderson. “I don’t know where they got the support.”

He said he understands why the provincial government went for the HST. “It was for that one-point-something billion dollars they got from the federal government,” said Anderson.

[BCLocalNews.com]