B.C. to drop HST for 'improved' PST

B.C. will drop the HST and return to an "improved" PST next year with all previous exemptions, Finance Minister Kevin Falcon announced on Monday in Victoria.

"We've got a much improved PST. It's not like the old piece of whatever you want to call it which was in place before,  which was enormously frustrating for a lot of our small business community in particular," Falcon said.

"It is  dramatically improved, simplified, administratively more clear."

The legislation introduced Monday includes some significant changes to the old tax, but only a few basic exemptions — such as those food and fuel — were contained in the bill.

Falcon promised those would be included in regulations to be introduced in the fall.

"As promised, on April 1, 2013 consumers will only pay PST on those goods and services that were subject to PST before the implementation of the HST. All permanent PST exemptions will be re-implemented," said Falcon.

"There will be no PST on purchases like food, restaurant meals, bicycles, gym memberships, movie tickets or for personal services like haircuts, just as it was previously."

Vander Zalm not satisfied

NDP finance critic Bruce Ralston says the government's message is, "Trust us."

"And I think, frankly on this file, the government doesn't have a big reservoir of trust," Ralston said.

Former premier Bill Vander Zalm, who orchestrated the downfall of the HST, says he's not entirely satisfied with the effort to bring back the PST.

He says people shouldn't have to trust the B.C. government to follow through with rest of the exemptions in the fall.

"It could be done so quickly," he said. ""They could have just had a few pages saying, 'The end of it, that's it, the people have spoken, no more HST, back to PST as it was.'"

Vander Zalm says the fight against the HST was about the democratic process, and he remains concerned the government will exclude the rest of the PST package from vigorous debate in the Legislature.

Changes for businesses

For business, there are a number of changes being introduced in the legislation, including an online system that will allow businesses to track their PST information and remit payments. 

The online system will cut down on paperwork, allowing the government to reduce the number of staff needed to administer the PST by about one third.

The Liberal government had taken a lot of criticism in recent months for delays in revealing exactly what the PST will look like once it's reinstated along with the GST.

The opposition NDP had suggested the PST might not feature the same exemptions it did before it was removed to make way for the HST. 

Prior to the introduction of the 12 per cent Harmonized Sales Tax in July 2010, B.C. residents paid a combination of the federal government's five per cent Goods and Services Tax and B.C.'s seven per cent Provincial Sales Tax on most items.

But the HST eliminated a number of significant exemptions. For example, restaurant meals were previously exempt from PST but were fully taxed under the HST system.

The HST was soundly defeated in a province-wide referendum last summer after a successful campaign to scrap the tax.  That tax revolt eventually lead to the resignation of former premier Gordon Campbell and has been equally damaging to current Premier Christy Clark.