BREAKING: BC will reduce HST to 10% if tax stays
By CO Staff @canadaone | May 25, 2011
BC — In a bold move designed to keep HST in the province, the government has announced that it wil reduce the HST from its current 12 per cent to 10 per cent if the tax survives the coming referendum.
The reduction will take place in two stages.
- On July 1, 2012 the government will cut the provincial tax portion, which is currently set at seven per cent, to six per cent.
- It will then cut the rate by an additional one per cent in July 1, 2014, bringing the provincial portion to five per cent.
The government also plans to provide one-time transition cheques of $175 per child to families with children under 18 years old. Seniors with low- and modest-incomes will also receive one-time transition cheques of $175.
This move should make the HST more attractive to British Columbians, who will soon decide whether the province will keep the HST or switch back to the old GST plus PST system.
An independent panel that reviewed the two tax systems recently estimated that families currently pay $350 more in tax under the HST system than they did under the previous tax system. However, the reduction to a 10 per cent rate should mean families will pay $120 less in tax on average than they did in the previous system.
UPDATE: HST cut caveats
With the next election scheduled for May 14, 2013, the first stage of the proposed cut will take place prior to the election, while the second stage will happen after.
But the HST cut will carry some baggage. The general corporate income tax rate will increase 2 points from 10 per cent to 12 per cent on January 1st, 2012. Also, the government will postpone the reduction of the small business tax rate, worth $280-million, that was orginally set for April 1st, 2012.
Question for Ontario political parties:
Ontario switched over to the HST at the same time as British Columbia. With a provincial election date set for October 6, 2011 CanadaOne's questions to each political party in Ontario is this: If elected, would you be willing to match BC and reduce the province's HST rate by 2 per cent by July 1, 2014?
If you enjoyed this article, be sure to visit CanadaOne's article knowledge base for more informative articles.