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HST in Canada

By Oz_Media ·
Foro those of you who aren't aware, Canada's Liberal party is seekign to impose a Harmonized Sales Tax on ALL goods, of 12%, as opposed to the PST and GST we pay on select goods now.

The Liberals (Canada's centre) suggest it will balance itself out as it will reduce processing costs for companies who will in turm be ale to lower prices a few points. The NDP (Canada's democrats)have started an online petition to oppose teh new tax, which will be tabled on in Burnaby BC next week.

I know there are a few Canadians here and this has raised some strong concerns from people, I'd also like to get some comparative political history from JamesRL if you are around.

I've never trusted the NDP, especially in BC, but I really don't support HST being applicable across the board, restaurants etc. where we've never paid both taxes.

I actually ignored this issue for a while but I just received an email from a friend, like a chain letter, looking for HST support. I don't agree to NDP actions though I do oppose HST for teh most part even though I understand the concept I don't see it balancing out as they suggest, so I will pass but I am interested in mor eof an Eastern Canadian view, and of course if there are actually ANY Americans who follow Canadian politics (for what reason I don' know)chime in.

So that's our huge political issue right now,it even made the news this time!! LOL, whether to combine our current taxes and apply them to a broader scale or not.

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Just out of casual interest,

by CharlieSpencer In reply to HST in Canada

What's PST and GST, and how do they differ from the HST?

The only national sales tax I'm aware of in the US is the one on gasoline, so the terms you're using are unfamiliar to me (and I suspect to most of us on the southern side of the border). Each state sets its own sales tax, and they vary from none to 8% or higher, and the items covered or exempted may vary. In some states counties and cities may also add additional sales taxes. We've discussed a national sales tax a couple of times, usually in conjunction with reducing or eliminating the income tax, but nothing has come of it.

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The GST came about

by JamesRL In reply to Just out of casual intere ...

as a replacement for a manufacturers tax. This tax was charged to manufacturers when they sold goods to wholesalers or retailers. It was hidden, but passed on to, end consumers.

The GST is transparent, you pay for it and its visible. Britain has something similar in the Value Added Tax (VAT).

James

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Thanks James

by Oz_Media In reply to The GST came about

Sorry Palmetto I guess I should have been more explicit.

As James said, we used to pay a manufacturing tax that was hidden into the cost of goods, it was an 11% tax called FST (Federal Sales Tax). When they introduced GST (Goods and Services Tax) people were in an uproar, not understanding that FST had been charged/included all along, as it wasn't added at the point of sale but included in the base price.

So when manufacturer's passed on the FST savings, base prices did drop and then they added 6% GST (I think it was at 6% at the time) at the point of sale instead. It was shown that Canadians prefer to see taxes added at the point of sale so they can see just how much tax they are paying, hidden or included taxes are just too hard to keep track of.

GST was actually reduced a point since then and now sits at 5%, which is charged in addition to a Provincial Sales Tax (PST) which in BC is at 7%. So a $1.00 price tag costs $1.07 with PST and if it is applicable an additional 5% GST is added, bringing the cost to $1.12.

With the previous system, the item would have cost $1.11 to begin with as it included 11& FST, and the 7% PST was added at the point of sale bringing it to $ 1.17 .

So the newer system actually saves you that 5 cents, theoretically.

This is what brings me to also question supporting the recent HST tax (despite the fact that it's an NDP-New Democratic Party action to stop it).

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Thanks guys

by CharlieSpencer In reply to Thanks James

I've got a minor interest in how other governments are organized, and how their processes differ from the US.

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The balance out will and won't occur - having done this

by Deadly Ernest In reply to HST in Canada

sort of costing within a business, I can tell you what will happen.

1. Tax is brought into law - long term it probably is good, no change in the short term.

2. This work currently done and checked by staff can be fully automated and reduce staff needs in overhead areas.

3. No changes to product prices.

4. Over a period of months or years staff adjustments will be made through natural attrition or job transfers in most companies, some will lay people off - a small number.

5. Once the staff savings are generated the next couple of minor price increases will not occur as they're absorbed through the staff savings.

From a business operational viewpoint a flat across the board tax rate on all goods and services is a damn sight easier and cheaper to manage. Also easier for people to handle.

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not really the same thing

by Oz_Media In reply to The balance out will and ...

With our transaction fees they are processing fees added by the banks for using what is now already a fully automated system.

A change for the retailer is simply a change in the POS software.

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Often more than a change of software

by Deadly Ernest In reply to not really the same thing

You said:

"A change for the retailer is simply a change in the POS software."

Many small to medium businesses don't have strong POS software that can do that.

However, with or without such software it still requires the paperwork for the purchasing invoices to be properly checked, coded, and filed for the different tax rates on the items as they come in - this is to meet accounting, auditing, and tax requirements. All this requirements staff time to process and file.

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The Real World

by pygar In reply to Often more than a change ...

For the truely small business this will require the cost of calling in a service tech to change your cash register setup. For next level up (most organized businesses)this will simply be covered by a change to the ubiquitous POS system.

After working for years in the retail and restaurant business as a tech specialist, there are so few serious businesses out there without some kind of POS that the front-end is not an issue of tax calculation. Do you really think your local corner store diner calculates tax on your bill???

As for the inventory side, the small to medium size businesses do not determine tax rates on individual items, they do this at the 'department' level, so there is no arduous process which will be eliminated resulting in this proposed decrease in overhead.

The big question here is: Do you think it's time to start charging a percentage of increased tax on certain businesses?

In BC we don't charge both PST and GST on everything. That is where the difference will occur in the long run and where the added money will come from for the government coffers.

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Even then pygar

by Oz_Media In reply to The Real World

I have seen people who don't read or speak English quickly reprogram their casio registers. most small businesses pick up a POS system at COSCO these days, even teh more rudimentary Casio system is simplo to reprogram. If anythign it is the larger companies that would call in a tech, I sued to go out to clients and reprogram them for free when I was in the aream it takes MERE MOMENTS.

I know you were agreeing with the ease of change, but it's even easier than that.

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You guys must REALLY do things different in Canada

by Deadly Ernest In reply to The Real World

Most small to medium businesses down here don't have departments to do things at the department level - the person or persons doing the accounts have to note on each invoice against each item what the appropriate tax rate is when it comes in and when it goes out - this is calculated and costed on each item. By determine I mean they look at the item, which government rate list it's on, and then note the rate against it; under the old Sales Tax system they often had to work out what USE the item was before they could determine the rate as some items could be charged at different rates depending upon the usage.

When we switched from a dozen different rates of Sales Tax to two rates of GST it became a lot easier, but would have been easier still at the flat rate the government proposed but had to compromise on to get the legislation passed.

Many small businesses down here still have old style cash registers without a true POS system. While the big companies will just have someone with the proper training make an adjustment in the software for their systems.

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