A recent TD report warned of British Columbia’s “lackluster investment prospects,” which are impeding strong economic growth. Fortunately, policymakers in Victoria can do something about it. The first step? Replace the provincial sales tax (PST) with a harmonized sales tax (HST).
Currently, B.C.’s PST applies to a wide range of goods and services including business inputs (e.g. machinery and equipment) at a rate of seven per cent. An HST—which existed in B.C. from 2010 to 2013—would apply to far fewer business inputs and therefore cause fewer distortions in consumer and business decisions than the PST. (British Columbians also pay a federal GST when they buy goods and services, but
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