Hated HST dropped in B.C. just as PEI residents get their first taste of it

Canadians at opposite ends of the country are dealing with a new sales tax regime starting today, and that's no April Fools' joke.

The long promised abolition of British Columbia's harmonized sales tax took effect April 1, two years after voters demanded it in a referendum.

Meanwhile, Prince Edward Islanders are paying the HST for the first time and beginning to learn which products will now cost more.

The public rejection of the HST and reversion to a combination of federal GST and provincial PST is one of those stories that could only happen in British Columbia.

It helped cost an otherwise successful premier his job and resurrect another long-disgraced premier. And with a provincial election about six weeks away, the reminder could give disgruntled voters an added incentive to punish the 12-year-old Liberal government.

[ Related: B.C. returns to old sales tax after HST rejection ]

The Liberals under then-premier Gordon Campbell sprang the HST on British Columbians shortly after the 2009 election, where the Liberals had insisted the tax was not on their radar.

Voters saw it as a betrayal. But instead of dying down, the broken promise festered despite Campbell's explanation the flip-flop was necessary because Ontario's embrace of the HST that year risked B.C.'s business competitiveness. The federal government's $1.6 billion to help ease the transition was also a juicy carrot for a government facing a massive budget deficit.

Although the 12-per-cent HST was no higher than the existing GST/PST combo, it applied to a wider range of goods and services. The government claimed consumers would save money because the business sector would pass on the savings it realized from the more efficient HST.

In fact, a government-appointed panel determined the HST was costing B.C. families $350 a year on average and that the government was collecting more revenue despite claims that other tax breaks and rebates balanced that off, the Globe and Mail reported last year.

It wasn't good for all businesses either. The restaurant and bar sector hated it because it increased the cost of dining out, which along with tougher anti-smoking laws hurt business.

But by then the HST was essentially a dead-tax walking, defeated a year earlier under the province's unique recall and initiative legislation.

Bill Vander Zalm, a former Social Credit premier who stepped down amid a conflict-of-interest scandal 20 years earlier, spearheaded a grassroots campaign that collected more than 500,000 signatures to force the government to hold a referendum in August 2011. Residents voted to return to separate provincial and federal sales taxes.

Campbell was already gone by then, the HST debacle the final stone sinking his popularity atop other lingering scandals. Campbell made a soft landing, appointed Canada's high commissioner in London. His successor, former cabinet minister and talk-show host Christy Clark, would be left to untangle the HST, rehire PST bureaucrats and pay back Ottawa's $1.6 billion by installments.

Clark issued a weekend message about the transition via YouTube, suggesting the change will hurt some business sectors, CTV News said.

“Some folks aren’t celebrating the return of the PST,” Clark said. “The HST was good for our film industry, good for manufacturing, and for many other sectors of our economy.”

It's taken two years to prepare for the transition but Small Business Minister Naomi Yamamoto told The Canadian Press about 25,000 businesses have yet to register to collect the new/old tax.

[ Related: HST takes effect on P.E.I. ]

Most businesses are mourning the demise of the less complicated HST but whether B.C. consumers will see any real savings from the return of the PST remains to be seen.

They won't have to pay PST on things like gym memberships, restaurant meals, bicycle purchases and haircuts, Yamamoto said. But for most other things there will be no change.

And starting today P.E.I. residents will get a first-hand view of the HST, which is set at 14 per cent. The rate is actually lower than the previous PST/GST rate of 15.5 per cent but consumers will feel its bite on products such as adult shoes and clothes, which were previously exempt from PST.

Like, B.C., the HST had opponents on P.E.I. The opposition Progressive Conservatives took out a newspaper ad calling this "Black Monday," CBC News reported.

But alas for Islanders, there's nothing short of an election that would allow them to dump the new tax if they want to.