REPORTING · 18th July 2010
On July 1st, 2010, two new tax regimes were put in place, not just the HST. This new taxation measure was installed in a suspiciously devious manner to collect more revenue while avoiding public scrutiny. In another move, contrary to the Provincial Governments own claims the new Harmonized Sales Tax (HST) would reduce pricing, the BC Government has directly raised their own prices to accommodate the HST.
The new tax, which British Columbians have not been widely informed of, is called the 'Tax on Designated Property' (TDP). It is a Provincially administered and collected tax having nothing to do with the HST, except for one small but significant detail, the tax rate. This new tax is being charged in place of the former sales transfer tax applied to the sale of a used vehicle.
See attached ICBC Autoplan Bulletin below for details.
When anyone sold or purchased a used car or truck prior to July 1st the 7% provincial tax was applied to the sale price. Every time the vehicle was sold the tax was collected again by the Provincial Government. This caused quite an outcry when it was first introduced and many find it somewhat unreasonable for the government to repeatedly charge tax on the same item.
On July 1st the Provincial sales tax was reduced to zero and the new Harmonized tax took effect at 12%. The sale of used vehicles was excluded from the HST process and the BC Government determined to use a new tax, the TDP, to continue collecting these revenues. Instead of setting the rate at the former level of 7% the Provincial Government determined to match the HST rate of 12 %.
One could be excused for believing the 12% they are now paying on their used vehicle purchase was simply a part of the HST, a necessary component to this new tax change. It has nothing to do with the HST and is wholly collected by the Provincial Government, a 5% increase without explanation, on the sale and every repeated sale of all registered used vehicles and equipment. Some have estimated this will increase the revenues to the Province by approximately $300 million but the numbers are not clear.
The Provincial Government has also raised the price of all the booze sold in the government run liquor stores to accommodate the HST. After numerous claims by the BC Government of how the businesses and retailers will be able to reduce their prices, the BC Government is doing the exact opposite. The BC Liquor distribution branch advised all their wholesale customers they raised their prices to avoid the necessary change on all the liquor store retail outlet displayed pricing.
See BC LCB notice attached below for details.
The Provincial Government had previously been charging 10% sales tax on liquor sales and this was combined with the 5% GST charged by the Federal Government for a total of 15%. When a customer went shopping at a government liquor store the display price included these combined taxes. With the introduction of the HST the prices should in effect be reduced by 3%. Many private liquor stores had begun reducing their pricing however the BC Government, through the BC Liquor Distribution Branch, determined they would not go through the process of changing all the display labels, rather they decided simply to raise all their prices to save themselves the trouble.
The customer will not notice this price increase as the labels on the shelves did not change; the government just quietly determined they would increase their revenues without general public awareness.
The same applies with the new TDP. The government could have continued to collect 7% by using this new tax; however they determined to match the 12% being charged by the Federal Governments HST. Whether these actions were done to purposefully deceive the general public is not clear. What is certain is there will be plenty of new revenue coming into the Provincial Government on top of the billions delivered by the Federal Government to institute this new tax. There is also no word, with these new tax revenues, if the government will now be able to reinstate funding to community organizations and to many of the services they have recently withdrawn.
Comment by Petri Nystrom on 18th July 2010
yea right, and if you believe that I have some oceanfront property for sale in Sask.