Celebrate The HST Says Tax Policy Expert

In a column appearing in the latest issue of Policy Perspectives, a Business Council of British Columbia publication, Kesselman says if you pass the HST through an economic prism it passes with flying colours.

In 'The Harmonized Sales Tax--Through an Economic Prism', Kesselman concludes the impending amalgamation of the provincial sales tax and the federal goods and services tax will improve tax simplicity, economic efficiency and equity.

"Some losers will arise in sectors that have enjoyed a tax-preferred status for many years, such as restaurants some sectors of the golf industry and home construction," says Kesselman, a co-originator of the now popular Tax-Free Savings Account. "But overall British Columbians will gain through a more competitive business sector yielding, over time, more investment, increased employment, and better-paying jobs."

Kesselman notes harmonization will save the B.C. government and ultimately taxpayers $80 million annually in public costs and partial compensation to businesses for collecting the provincial retail sales tax (RST).

The SFU Canada Research Chair in Public Finance adds: "Businesses and other B.C. entities now collecting the RST will save a further estimated $150 million per year in compliance costs...Business cost savings of $100 million per year will flow through as lower prices for consumers."

Kesselman calls the RST "a dying breed" that survives in only a few jurisdictions around the world. He suggests that consumers would find the amalgamated provincial and federal sales taxes more palatable if the government adopted a tax-inclusive pricing system that doesn't treat the HST as an add-on expense.

Editor's Note:
Please also read: http://www.bcbc.com/Documents/ppv17n2.pdf