BC Voters Reject the HST

After two years of controversy in British Columbia over the harmonized sales tax (HST), the province's voters have officially rejected it. The results of the mail-in referendum on the tax were announced on August 26, 2011. A majority of 54.73 percent of those who voted turned down the tax in the binding referendum. The province will go back to a GST and PST tax system, although it will take at least 18 months to do so.

BC Finance Minister Kevin Falcon told a press conference that the PST will be reinstated at 7 percent, along with the federal 5 percent GST, and include all "permanent" tax exemptions. He added that the BC government may make some administrative changes to modernize its 60-year-old legislation.

The province will also have to find a way to pay back the federal government the $1.6 million it gave B.C. for implementing the HST in the first place.

The federal government will need to pass legislation to repeal the BC HST tax, and put transition rules in place for moving back to the old GST/PST system. Then the BC government will be able to put its own transition rules in place.

B.C. will need to put a PST office back in place; about 100,000 businesses in the province will need to register and set up their own systems to collect the PST again; and about 30,000 businesses which have been started since the HST was implemented will have to be trained in collecting the PST.

Although Premier Christy Clark has been indicating for some time that she would like to call a provincial election before the set election date of May 14, 2013, she has avoided answering any questions about that since the referendum results were announced.