HST may allow business owners to reduce operational costs
One of the biggest changes coming this year for small businesses in Ontario and British Columbia is the introduction of the Harmonized Sales Tax. Slated to take place on July 1, 2010, the HST combines the Goods and Services Tax and Provincial Sales Tax into a single sales tax.
While the public reception to the new tax has been mixed, small business owners in Ontario and British Columbia may benefit from the change over to the HST. In a recent article for the Times Colonist, small business owner Martin Allen explains why some small business owners should be looking forward to the tax.
Right now, a service-providing enterprise can claim back the GST it pays on input, but it also has to accept the losses it pays on the PST, says Allen. When the HST is introduced, a service-supplying business can still claim back the HST it pays, much like they do now with the GST. They will, however, no longer be absorbing the PST. That means service-providing enterprises should see a reduction in overhead.
A study conducted by the Martin Task Force on Competitiveness, Productivity and Economic Progress last November echoes Allen's statements. The study said that HST will allow small businesses to recover taxes paid on goods while lowering administrative costs.
