Tax fight on Canada's Pacific coast gains traction

Wed Jun 30, 2010 5:22pm EDT
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By Allan Dowd

VANCOUVER (Reuters) - British Columbia's tax revolt picked up speed on Wednesday, with organizers filing referendum petitions they say should force the province to scrap a controversial deal with Ottawa.

The battle over the Harmonized Sales Tax (HST), which takes effect on Thursday, has hammered the political fortunes of Premier Gordon Campbell and his right-of-center BC Liberal Party that has governed the province since 2001.

HST opponents were held a rally in provincial capital of Victoria to give election officials petitions with more than 700,000 voter signatures supporting a repeal of the merger of the provincial and federal sales taxes.

If the signature petitions are certified, British Columbia's Legislature would either have to reconsider its approval of the HST or put the issue to public vote.

Under a deal signed with the federal government last year, British Columbia agreed to create the 12 percent HST by merging its 7 percent sales tax with the federal 5 percent goods and services tax.

The two taxes had been collected separately with different rules on what was considered taxable.

Although the total rate remains the same, opponents say it will increase people's costs because they will have to pay the full 12 percent tax on many goods and services that had only been subject to federal tax before.

But the government says HST will help British Columbia's economy by reducing C$2 billion tax and administrative costs on the goods and services used by businesses. The lower costs can then be passed on to consumers, HST supporters say.   Continued...