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Revenue neutral

A recent editorial incorrectly implied that the HST is not revenue neutral because a local fast food chain now remits more tax to Victoria. Restaurants used to pay PST on many of the goods they purchase for their operations.

A recent editorial incorrectly implied that the HST is not revenue neutral because a local fast food chain now remits more tax to Victoria. Restaurants used to pay PST on many of the goods they purchase for their operations. This included PST on telephone costs, kitchen equipment, tables, chairs, dishes, linens, menus, cleaning supplies, delivery vehicles and repairs and maintenance to the vehicles. This embedded PST was passed on to consumers in the price of the final product. While HST is also payable on these same items, most businesses can recover the HST they pay through input tax credits, and no longer need to pass on the cost of the PST to consumers. This is why businesses are saving $1.9 billion each year, and why the HST is expected to attract $11.5 billion in new investment in B.C. by the end of the decade.

For about 80 per cent of consumer spending in B.C., there is no change in tax with harmonization because many goods are either not taxable under HST or they were already subject to the PST. Although you now pay the HST on junk food and fast food, you don't pay HST on basic groceries.

Harmonization will improve B.C.'s overall economy, increasing its competitiveness and ultimately providing the foundation for more jobs. People who are working have more money to spend on restaurants, recreation and tourism. A strong economy will benefit all sectors.

Colin Hansen,

minister of finance