The Harmonized Sales Tax (HST) may have won friends in Sea to Sky, but not enough across B.C. to survive a province-wide referendum.
Elections BC announced Friday morning that British Columbians have voted 54.73 per cent to scrap the HST, signaling a move back to the old Provincial Sales Tax (PST) system that was in effect until July 1, 2010.
In the Sea to Sky region, however, response to the tax was more positive. Results released by Elections BC indicate that voters in the riding that includes Squamish, Whistler and Pemberton voted 60.78 per cent to keep the HST, with 16,833 voting in total.
Larry Falcon, a campaigner against the HST during an initiative petition that sought to restore the old tax system, was happy at the news but added it could have an adverse effect on businesses.
"It's a sad day for businesses but it's a great day for consumers," he said.
Falcon joined the campaign while a part-owner of Wild Willies, a now-closed ski and outdoor store. Part of the business involved renting bikes, which had a tax exemption under the old PST system.
"With the demise of the PST we lost that exemption, bikes and bike parts accessories," he said. "From that standpoint, we were affected very readily out of the gate with it and that's why I got involved in it."
The demise of the HST got a very different reaction from Bob Adams, co-owner with Sue Adams of the Grocery Store in Whistler Village.
"Oh no," he said when informed of the result.
"I'm totally disappointed... It creates a second level of taxation that we have to deal with, and so that's an ongoing issue. We've got two different groups coming in. We can be audited by the provincial, as well as the federal, government.
"But secondly, I think we're going to have to go through and reprogram all our items in our store, you know, separating out which gets GST, which gets PST, and they're not the same necessarily, so you know, it just makes an awful lot of extra work."
Kendra Mazzei, board chair of the Whistler Chamber of Commerce, said in a statement that she was disappointed in the outcome of the HST referendum, adding that a dialogue needs to take place that will put jobs first under a "competitive tax system."
"We will look to the B.C. government to support a new and improved PST that could include some of the efficiencies found in value-added taxes," she said. "This includes initiating a process of determining the best type of tax for British Columbia."
The Chamber, Mazzei said, will initiate a discussion within the provincial Chamber network in the next six to 12 months to see what the new consumption tax model might look like.
With the return to PST/GST, many items that currently have HST applied to them will have that tax removed. That includes services including spa appointments, accountants and gym memberships. The 12 per cent tax that currently applies to these businesses will be brought down to five per cent. Bike shops and children's clothing stores, too, will benefit from the change. It will no longer apply to rent and recreational fees, or even parking fees - one of the reasons the cost of pay parking in Whistler was slated to go up.
Restaurants will also no longer have to charge 12 per cent for meals. That tax will go down to five per cent, just like other services.
In a statement released Friday, the British Columbia Restaurant and Foodservices Association said that it's time for British Columbia to move forward.
"We applaud the provincial government for having the courage to put the HST decision in the hands of the general public," president and CEO Ian Tostenson said in the statement. "It is now time for us as an association, an industry and a province to get behind small business to ensure long term economic growth and prosperity."
B.C. Finance Minister Kevin Falcon, Larry Falcon's brother, has pegged March 31, 2013 as the date upon which the province will go back to the PST/GST system, which was in place for 60 years before HST was implemented.
A lengthy public consultation is expected to precede the transition back to PST/GST. The minister said there are "significant fiscal impacts" in terms of the revenues that are generated under PST/GST and added that the government will discuss with the public how to "responsibly deal with that."
"This is a significant bump in the road," he said of the HST failing in the referendum.
"This is, I think, a very good way to go forward and it's one of the ways we will engage the public in terms of the pressures we will face in the outer years, as a result of going back to PST/GST."
Both the provincial and federal governments will have to implement transitional rules for going back to the old tax system and consultations will have to take place with 30,000 B.C. businesses that "never operated in the PST world."
The minister said that B.C. is still committed to achieving a balanced budget in 2013/2014 and warned the public not to expect a lot of support for higher spending up to that point.
"As government manages to get back to a balanced budget, it means we'll be saying no a lot more than we'll be saying yes, especially with regards to increased spending," he said.
"We can manage this. I would have preferred to deal with another situation, but as I said at the beginning we put a team together weeks ago in the event of the likely outcome of going back.
"We're prepared for the worst and we will manage through it."
