A few administrative gains for business in B.C.’s return-to-PST legislation won’t offset the damage to B.C.’s economy that will result from losing the HST.
That’s how B.C. business experts are viewing the province’s Bill 54, which is set to return the province to the PST on April 1, 2013.
Jock Finlayson, executive vice-president of the Business Council of British Columbia, said that while there’s very little “good” news for business in a return to PST, the legislation contains a few “positives.”
He highlighted that the legislation will:
- make it easier for businesses to deal with PST online by allowing them to register, update their account and make payments;
- shift the timing of PST tax remittance and tax returns so they match GST remittance timing; and
- for the hotel industry, incorporate the hotel room tax into the PST, thereby eliminating the need for separate registration and filing.
Kin Lo, an assistant professor of accounting at Sauder School of Business, said the administrative improvements in the legislation might save businesses some administrative costs they previously faced under PST.
But he cautioned that they’ll be minor compared with the extra administrative burden businesses will face by reverting to the old tax regime.
He noted, for example, that enabling businesses to file PST forms online won’t save major ones.
“The final form for the PST is pretty short, and converting that part to online filing is better, but most of the cost is incurred prior that point.”
Finlayson said the legislation, with its administrative improvements to the PST, “does not really address” competitive and cost disadvantages that many B.C. industries will face when the HST goes.
“We estimate that the cost of producing goods [and] services in B.C. will rise by $1.6 billion per year under the re-instituted PST, compared with the cost of doing business under the HST,” he said. “On top of this, sales tax-related compliance and administration costs for B.C. businesses will be higher by approximately $150 million per year, as the compliance and other paperwork cost savings associated with harmonization disappear and the extra costs from having two sales tax systems return.”
Could the return-to-PST legislation have been more business friendly?
Kin thinks not.
“I think [the government] did about as much as they could do without appearing to circumvent the will of the voters,” he said, referring to the referendum that rejected the HST.
Neither Kin nor Finlayson expect to see a more business-friendly tax system in the province any time soon.
“Over time the government will have options to mitigate the economic damage attendant upon returning to the antiquated and inefficient PST, ” Finlayson said, “but in the short term the province doesn’t have much room to manoeuvre.” •
