![HST defeat may lead BC to adopt QST model](https://www.benefitscanada.com/wp-content/uploads/sites/7/2011/01/news1.jpg)
A “Yes” win in the B.C. referendum on the HST may not mean a return to the previous provincial sales tax regime in British Columbia. Instead, B.C.’s return to a provincial sales tax could be modeled on the Quebec Sales Tax (QST).
The QST is a provincial sales tax, but it is harmonized with the GST rules. The tax is administered by the province, which also collects the GST on behalf of the federal government.
“The QST model may be a good way out for B.C. on a lot of the thorny issues in unraveling the HST”, says pension sales tax expert Greg Hurst of Greg Hurst & Associates Ltd. “As a starting point, the federal government’s commitment in the June 2011 Budget to compensate Quebec for their “harmonized” QST will serve as a precedent for B.C. to minimize or perhaps even avoid re-payment of the $1.6 billion Ottawa paid for B.C.’s harmonization.”
If the Quebec model is followed, a new B.C. provincial sales tax would still be a “value-added tax” (VAT). The retention of the concept of input tax credits associated with a VAT would allow businesses to benefit in much the same way they do under the HST, although administration may be somewhat more complicated. In particular, organizations that also do business outside of B.C. would have to maintain both B.C. and federal sales tax registrations and reporting.