Tax Impact of BC's HST Debate on Investment and Competitiveness

University of Calgary – School of Public Policy Communiqué, Vol. 3, Issue 1, May 2011

4 Pages Posted: 25 Jul 2011 Last revised: 7 Sep 2011

See all articles by Jack Mintz

Jack Mintz

University of Calgary - The School of Public Policy; CESifo (Center for Economic Studies and Ifo Institute)

Date Written: May 25, 2011

Abstract

If voters kill British Columbia’s Harmonized Sales Tax (HST) in a June referendum, the province’s economy will suffer in the long run. A rejection will spur the rebirth of the provincial retail sales tax, leading to steep increases in the marginal effective tax rates on capital and costs and a corresponding dip in investment and job creation. Should voters decide to keep the HST, BC will reduce the tax by two points over the next three years and raise the corporate income tax rate to bridge the revenue gap. This will also negatively impact corporate competitiveness, but since the government has indicated that the hike will be temporary, retaining the HST is the best option for BC’s economy.

Keywords: B.C., HST, tax, policy, investment, competitiveness

Suggested Citation

Mintz, Jack, Tax Impact of BC's HST Debate on Investment and Competitiveness (May 25, 2011). University of Calgary – School of Public Policy Communiqué, Vol. 3, Issue 1, May 2011, Available at SSRN: https://ssrn.com/abstract=1894936

Jack Mintz (Contact Author)

University of Calgary - The School of Public Policy ( email )

Calgary, Alberta
Canada
403-220-7661 (Phone)

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

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