VAT and HST – haven’t I seen this all before?

Garry Pendergast

When the first mutterings about the introduction of HST (Harmonized Sales Tax) appeared in The Revelstoke Current I couldn’t help but remember back to the 1970s when the Value Added Tax or VAT came into our lives in Britain.

Before that time we had a Purchase Tax that was introduced during the early days of the Second World War supposedly to help the war effort. At its introduction it had several different rates and was often changed, probably based on what people wanted to buy so that the tax actually brought in some money for the government of Winston Churchill. The Purchase Tax actually lasted 33 years. It was as a condition of UK entry to Europe (and that is another story) that the acronym VAT entered our lives.

It started as two separate rates of 12.5% for  ‘luxury goods’ (although not too many were luxurious) and a lower, general rate of 8% on other items deemed ‘taxable’. The UK won an important extra by being able to have a 0% rate (all items had to have a rate, nothing could be exempt – this was so, a cynic would say, the government of the day could increase the rate without changing the law). Consecutive governments changed the rate (always upward) until today the rate stands at 17.5% on all goods that are deemed taxable. The list of 0% items is much the same in the UK as here in Canada. What really started the problem was when the government of the day said it was illegal to separate the tax from the cost of the item bought and so unless you were really quick with your math you couldn’t tell how much was for the item and how much was tax. There were demonstrations and protests and some shop-owners refused to do as the government said but slowly they were taken to the courts and everyone accepted it.

More recently, when the recession really hit in the UK, the government decided to lower the rate to 15% as part of their stimulus package. The government reduced the rate for 13 months and claimed they were saving buyers £12,500,000,000 (about $20,000,000,000 at today’s rates) that shows just how much this tax raises for the government!

What British Columbians need to watch is when the BC government wants to incorporate the tax into the total cost of an item. As a shop-owner it would then be your responsibility to work out how much HST you owe as well as acting as tax collector for the government.

I have a real problem about being a tax collector and not being paid for it – but that is another argument!

Did I like paying VAT?


I still struggle with the concept of paying for something and then being taxed for doing so. I understand income tax – I get many things from income tax – but from VAT/HST… I’ve already paid for the goods – why tax me on it?

I would say that is a disincentive for buying in the first place. We all need ‘stuff’ whether for living or enjoying or giving or as a basic need and doesn’t the government (of whichever country) know that?

So keep an eye on that HST.

You may think you pay enough already, yet VAT in the UK is now ready — if you believe the media — to rise to 20 or 21%! Now just work that out!

Garry Pendergast is a Revelstoke resident and a refugee from the VAT-ridden United Kingdom