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Consumer Impacts of BC's Harmonized Sales Tax: Tax Grab or Pass-Through?

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  • Jonathan R. Kesselman

Abstract

Introduction of the harmonized sales tax has upset much of the BC public, particularly for its perceived impact on the cost of living. This study examines misconceptions over the coverage, operation, and consumer impacts of the HST relative to the retail sales tax that it replaced; the study explains their structural and operational differences. Previous forecasts of the consumer impacts are reviewed and tested by the first quantitative analysis for British Columbia based on data since the HST was implemented. The key finding is that the HST has raised BC's cost of living by 0.5 to 0.6 percent, which is consistent with businesses having passed through to consumers all of their tax savings related to in-province sales. The study offers policy options for offsetting even the small consumer impact of the HST and improving its public acceptance.

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  • Jonathan R. Kesselman, 2011. "Consumer Impacts of BC's Harmonized Sales Tax: Tax Grab or Pass-Through?," Canadian Public Policy, University of Toronto Press, vol. 37(2), pages 139-162, June.
    • Handle: RePEc:cpp:issued:v:37:y:2011:i:2:p:139-162
    DOI: 10.3138/cpp.37.2.139
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    Cited by:

    1. Martin Mellens & Hendrik Vrijburg & Jonneke Dijkstra, 2014. "Robust estimation of the VAT pass-through in the Netherlands," CPB Discussion Paper 297, CPB Netherlands Bureau for Economic Policy Analysis.
    2. Ferede, Ergete & Dahlby, Bev, 2012. "The Impact of Tax Cuts on Economic Growth: Evidence From the Canadian Provinces," National Tax Journal, National Tax Association;National Tax Journal, vol. 65(3), pages 563-594, September.
    3. Martin Mellens & Hendrik Vrijburg & Jonneke Dijkstra, 2014. "Robust estimation of the VAT pass-through in the Netherlands," CPB Discussion Paper 297.rdf, CPB Netherlands Bureau for Economic Policy Analysis.

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