Stop HST!!!

In Canada, the Harmonized Sales Tax (HST) combines the Goods and Services Tax (GST) and Provincial Sales Tax (PST) into a single sales tax. The first attempt at creating a harmonized sales tax was in Saskatchewan shortly after the GST was introduced in 1991.

The Progressive Conservative government under Premier Grant Devine harmonized its existing PST with the GST - ostensibly to make tax collection easier for merchants. The harmonization proved to be immensely unpopular.

The GST itself was very unpopular at the time and perhaps more importantly the federal tax was charged on many items the Saskatchewan PST was not (such as restaurant meals); harmonization was therefore seen as a tax grab. In the general election of that year, the New Democratic Party under Roy Romanow promised to reverse the harmonization—this promise likely contributed to their landslide victory.

Saskatchewan's NDP government did not propose re-harmonizing the sales taxes while in office, although they did significantly increase the number of items covered by their own sales tax during their time in power.

In 1996, three Atlantic provinces with Liberal governments—New Brunswick, Newfoundland and Labrador, and Nova Scotia—agreed with the federal government to create a new Harmonized Sales Tax. To make this new tax more palatable to the public, the provinces all agreed to lower their sales tax rates to eight percent. The result was a 15% combined tax when the federal rate of seven percent was added. The new tax went into effect on April 1, 1997. The HST is collected by the Canada Revenue Agency, which then remits the appropriate amounts to the participating provinces. As of 1 July 2006, the GST was lowered to 6%, resulting in a combined HST of 14%. Effective 1 January 2008, the GST was further lowered to 5%, resulting in a combined HST of 13%.

As of 2009, the HST remains in effect in the three Atlantic provinces where it was first introduced, although all three provinces have elected Progressive Conservative governments since that time. The other provinces continue to have separate GST and PST taxes (except Alberta, which has no PST). Among other problems, different legislation at the federal and provincial levels means that some goods are subject to GST but not PST or vice versa, and a single tax cannot cover such a situation. To make matters more confusing, Quebec (7.5%) and Prince Edward Island (10%) charge their PSTs on the GST.

On March 26, 2009 in its annual budget, the province of Ontario announced its intention to merge the PST and GST to take effect on July 1, 2010. On July 1, 2010, the sales taxes in British Columbia will also be reformed to merge the PST and GST.

Although the benefits in terms of simplifying sales tax collection are obvious, disputes between the federal and provincial levels of government over what supplies should be taxed mean that the remaining un-harmonized provinces are loath to give up their legislative power to determine what goods should be subject to PST.