Welcome the HST

On July 1^st, Ontario and British Columbia will be adopting the new Harmonized Sales Tax system currently being used in other parts of the country.

The National Post ran an interesting article last week debating the pros and cons of the new tax system. Well, let me give you my first hand experience with HST.

I can recall when HST was introduced in Atlantic Canada in 1997. Businesses were worried about increased costs to consumers. We were concerned about the integration of the new tax in our cash systems. Looking back, it simply boiled down to one thing; we were just afraid of change. We were afraid of the unknown.

I’m here to tell you that HST has been very good for business.

The way I see it, HST has three major advantages for business.

1. HST makes compliance much easier. With one system, and one reporting process, collecting and submitting one tax is far easier than handing two different tax systems.
2. Tax credit system. Like GST, businesses get to claim the HST paid for supplies and products back in the form of a tax credit against their HST submissions. It simply washes through for most businesses, eliminating sales tax as a cost of doing business.
3. With businesses able to claim all the HST they spend, it virtually eliminates the incentive for small companies to do business under the table. Contrary to many arguments, when it comes to those smaller businesses, it actually reduces under the table, cash business. This is good for legitimate businesses who find they are competing with smaller private service operators.

All told HST is good for business. Take it from someone who has already gone through it. It is nothing to fear. It is not going to make your computer melt, or your customers run away. It is going to arrive, people are going to adapt very quickly and before too long you’ll wonder why the government didn’t introduce it long ago.