2010 Implementation
The Government of Canada's 2008 federal budget called sales tax harmonization "the single most important step provinces with retail sales taxes could take to improve the competitiveness of Canadian businesses" and federal finance officials began to pressure/entice non-HST provinces to abandon their PST systems.
Consequently in 2008 and 2009 the provinces of Ontario and British Columbia entered into negotiations with the Government of Canada for adopting the HST.
On March 26, 2009 in its annual budget, the province of Ontario announced its intention to merge the PST and GST to take effect on July 1, 2010.
On 1 July 2010 the HST was implemented in the provinces of Ontario and British Columbia, despite public opinion polls showing that 82% of British Columbians and 74% of Ontarians opposed it before it was implemented. The implementation of HST in British Columbia and Ontario replaced the separate GST and PST charged on goods and services in those provinces. Evidence from numerous studies demonstrated that tax harmonization raises business investment and that PST-type taxes slowed provincial economic growth. British Columbia combined the 5% GST with a 7% PST and implemented the HST at a rate of 12% and has committed to lowering the HST by two points, to 10%, by 2014. Ontario’s HST rate is 13%, similar to New Brunswick and Newfoundland and Labrador. British Columbia residents voted in a referendum in August 2011 to repeal the HST and return to separate PST and GST, however, as of July 2012 the separate taxes have not been implemented.
The sales tax in British Columbia was also restructured, merging the PST with the GST, effective July 1, 2010.
The HST attempts to build a more efficient tax system while not increasing sales tax revenues. Ontario will provide a refundable tax credit of up to $260 per adult or child for 2010-11 to low income people, and British Columbia will provide a refundable tax credit of up to $230 per adult or child for 2010-11. The federal and provincial tax credits are paid quarterly through the year. British Columbia will also mail out a onetime transition payment of $175 to low and modest income seniors as well as $175 for each child under 18 to every family with children.
On 4 May 2011, an independent panel commissioned by the British Columbia government released a report on the impact of the HST in that province. The report concluded that "Unless you are among the 15 per cent of families with an income under $10,000 a year, you’re paying more sales tax under the HST than you would under the PST/GST: On average about $350 per family."
The report also predicted that by 2020, the HST is anticipated to result in a BC economy that will "Be $2.5 billion larger than it would be under the PST. That’s about $480 per person or $830 per family."
Read more about this topic: Harmonized Sales Tax