B.C. Transportation Minister Todd Stone.

Province agrees to blend transit tax with PST

Referendum Yes won't create third tax line on bills in Metro Vancouver, says transportation minister

The proposed 0.5 per cent sales tax for transportation improvements – if passed by voters in a referendum this spring – will simply be added to the seven per cent PST on receipts instead of adding an extra line and more headaches for businesses.

B.C. Transportation Minister Todd Stone outlined the change in a letter to Metro Vancouver mayors over the weekend.

It will still be known as the Metro Congestion Improvement Tax but would not be displayed as a distinct third tax on bills or require complex adjustments for businesses.

“Consumers would see a combined PST and MCIT totalling 7.5 per cent at the point of sale,” Stone said. “We would not require businesses to separately identify the MCIT on receipts or invoices.”

Stone was responding to business complaints about the extra complexity that an additional tax line was going to create.

The Retail Council of Canada last week said it would oppose the referendum unless the province agreed to harmonize the new tax with the PST so it doesn’t become a separate tax and burden for business.

Retail council spokesman Greg Wilson said the tax threatened to create a “dramatic increase in red tape.”

Stone said the new tax, if approved, will mirror the tax base of the PST as much as possible, unless Metro mayors want additional exemptions.

Metro mayors originally proposed a simple 0.5 per cent increase to the PST, but the province had indicated it would instead be a separate tax with its own name applying to the “majority” of transactions subject to PST.

B.C. Chamber of Commerce president John Winter said the province’s decision addresses the concerns of small businesses that they would have shouldered a significant new cost and administrative burden.

“This announcement removes this concern entirely,” he said.

Mayors’ Council chair Gregor Robertson said mayors won’t seek any further exemptions and praised the province for ending confusion over how it would be collected.

“Application of the PST to the tax base has always remained a provincial responsibility and this harmonization provides seamless administration. We want to ensure that simplicity continues so we will not be requesting any further exemptions.”

Robertson noted everything that is PST-exempt – including groceries, children’s clothing, transportation expenses and prescription medicine – would be exempt from the new Metro tax.

Still unresolved is whether big purchases like vehicles will be taxed based on where the buyer lives not where the sale takes place – a key concern of Metro car dealers worried about losing business to out-of-region competitors.

The additional sales tax to be charged only in Metro Vancouver would raise $250 million per year to fund the region’s share of $7.5-billion in transit and transportation upgrades, including light rail lines in Surrey, a Broadway subway in Vancouver, 11 new B-Line express bus routes, a 25 per cent lift in bus service and more frequent SeaBus runs.

Voters should receive the mail-in ballot in late March and have until May 29 to send it to Elections BC.