Reforming the PST can be a powerful tool to get people, businesses back to work long-term

Reforming the PST can be a powerful tool to get people, businesses back to work long-term

Stronger tomorrow plan offers blueprint for job-rich recovery, says Jeff Zweig and Greg D’Avignon

Despite being one of the world’s great certainties, we often forget that taxes exist to generate the revenue that governments need to support public services – which enhance our quality of life and protect those vulnerable in society, as we have seen throughout this pandemic.

On the other hand, taxes are costly to administer, stifle investment, and are unevenly applied. This can bog down the very economic growth we rely on to generate much-needed government revenue.

British Columbia’s Provincial Sales Tax (PST) is one of these taxes.

B.C. introduced the PST when the Queen was a princess. A lot has changed over the last 70 years. Unfortunately, the PST has aged poorly and is now an archaic tool in a modern world that doesn’t meet the needs of people, the economy, or governments today. It unfairly impacts medium and low-income households and misses a large part of the new economy.

Simply put, the PST needs to retire. It has become a web of rules, complexity, and layers that few understand – and some try to avoid. For example, a bicycle is PST exempt, but an E-bicycle or unicycle is not. Bike parts are exempt if bought with the original bike but require PST to be paid if bought on their own. Propane from the same tank if used for one business purpose is PST exempt but if used for another business purpose requires PST to be paid. How is that possible?

As we continue to fight COVID-19, we need to start taking bold action to rebuild our economy. This week, a coalition of community, post-secondary and business leaders from small and large firms released Stronger Today, Starting Tomorrow – an economic plan for BC families and businesses. Among the 24 recommendations included in this Plan is an immediate halving of the PST to 3.5 per cent for two years to help families, businesses, and our economy.

Paying less tax will means British Columbians will have a bit more money to spend through these uncertain times. Reducing the PST will help families make ends meet, free up funds for household necessities or a take up a new family activity.

The question we should be asking in Dawson Creek, Kelowna, Nanaimo, and everywhere in between is if a PST cut should just be a temporary first step. For a truly lasting impact, the Stronger Tomorrow plan recommends evolving the almost 75-year-old PST into a made-in-B.C. value added tax system.

To be clear, this is not about bringing back the HST that was rejected by British Columbians and controlled by federal government rules. The recommendation is a plan is a made-in-B.C. tax where the decisions about how the tax system works – like determining which items are taxed and those that are exempt – would be decided by British Columbians, not Ottawa. For instance, all types of food consumption and food services could be tax-exempt and lower-income households could get a tax credit like the GST credit.

Reforming the sales tax system would bring two big benefits. First, a modern tax system would spread the tax across a wider array of goods or services, which means everyone pays their fair share across the economy, while creating a real opportunity to reduce the tax rate below the current seven per cent.

The second big benefit is job creation. With the sales tax system modernized, business wouldn’t be paying a provincial tax that has to be included in their prices. That cost would be removed, and customers won’t end up paying tax on taxes paid by the business. Businesses can put their savings into growing their company and creating more jobs – which in turn contributes to government revenues.

The next two years offer plenty of time for the provincial government to consult with British Columbians about real, meaningful tax reform.

But British Columbians struggling through the downturn don’t have two years to figure out how to make ends meet – they need help right now. B.C. families could get tangible help with their household costs by the government taking action and cutting the PST today.

Greg D’Avignon is president and CEO of the Business Council of B.C., and Jeff Zweig is the president and chief executive officer of Mosaic Forest Management and chair of the Business Council of B.C.

Just Posted

Parking time is to be limited in one spot on 9th. (Houston Today photo)
District seeks grant to update bylaws

And decides on 15-minute parking

Bench installation on 9th Street is another sign the project is nearing completion. (Houston Today photo)
Progress being made on 9th Street finish

District aiming for June completion

File photo
Mental health checks proving valuable

Police officer and nurse team up each week

The two billboards for the Cow Moose Sign project arrived in Topley last week with Justin Cradock, owner of Pitbull Trucking Ltd. and the area is now getting prepared for installation. (Dan Simmons photo/Houston Today)
Cow Moose sign project billboards arrive in Topley

Two billboards for the Cow Moose Sign project have arrived in Topley… Continue reading

File photo
Snow clearing changes would cost money, survey finds

Council being asked to give direction

Daily confirmed COVID-19 cases reported to B.C. public health, seven-day rolling average in white, to May 12, 2021. (B.C. Centre for Disease Control)
B.C. preparing ‘Restart 2.0’ from COVID-19 as June approaches

Daily infections fall below 500 Friday, down to 387 in hospital

On Friday, May 14 at Meadow Gardens Golf Club in Pitt Meadows, Michael Caan joined a very elite club of golfers who have shot under 60 (Instagram)
Crowds at English Bay were blasted with a large beam of light from an RCMP Air-1 helicopter on Friday, May 14. THE CANADIAN PRESS/Marc Grandmaison
Police enlist RCMP helicopter to disperse thousands crowded on Vancouver beach

On Friday night, police were witness to ‘several thousand people staying well into the evening’

People shop in Chinatown in Vancouver on Friday, February 5, 2021. THE CANADIAN PRESS/Jonathan Hayward
Vancouver community leaders call for action following 717% rise in anti-Asian hate crimes

‘The alarming rise of anti-Asian hate in Canada and south of the border shows Asians have not been fully accepted in North America,’ says Carol Lee

Sinikka Gay Elliott was reported missing on Salt Spring Island on Wednesday, May 12. (Courtesty Salt Spring RCMP)
Body of UBC professor found on Salt Spring Island, no foul play suspected

Sinikka Elliott taught sociology at the university

The first Black judge named to the BC Supreme Court, Selwyn Romilly, was handcuffed at 9:15 a.m. May 14 while walking along the seawall. (YouTube/Screen grab)
Police apologize after wrongly arresting B.C.’s first Black Supreme Court Justice

At 81 years old, the retired judge was handcuffed in public while out for a walk Friday morning

Dr. Steve Beerman, of Nanaimo, shows off his Dr. David Bishop Gold Medal, awarded for distinguished medical service. (Karl Yu/News Bulletin)
Queen presents Vancouver Island doctor with award for global drowning prevention

Dr. Steve Beerman receives Royal Life Saving Society’s King Edward VII Cup at virtual ceremony

Former UFV Cascades wrestling coach Arjan Singh Bhullar is now the ONE heavyweight champion after defeating Brandon Vera via TKO in round two on Saturday in Singapore. (ONE Championship)
Former UFV wrestling coach wins MMA championship

Arjan Singh Bhullar captures ONE heavyweight title, first Indian origin fighter to achieve honour

Astra Zeneca vaccine waits for injection in a Feb. 3, 2021 file photo. A Langley man has become the second B.C. resident to suffer a blood clot following an injection. (AP Photo/Frank Augstein)
B.C. man required emergency surgery after AstraZeneca vaccination

Shaun Mulldoon suffered ‘massive blood clot’ after jab

Most Read