Businesses are understandably skeptical of the benefits of harmonizing B.C.’s provincial sales tax with the GST.

The HST effectively adds seven per cent tax to various services previously exempt from provincial sales tax, including utility bills, funerals, hair care, restaurant meals, real estate fees, movie tickets and air fares.

While they will get credit for taxes they pay on supplies, equipment and materials for their business and the paperwork they do will be reduced, they are consumers like everyone else and are worried about the impact of taxing things, especially services, that aren’t taxed now.

Small firms could lose a small perk they get, a percentage of the PST they collect on behalf of customers worth up to $200, and large firms won’t see all the tax benefits right away.

But it’s the personal service industry, realtors, home improvement contractors and restaurateurs that will be hit hardest when those industries add another seven per cent to their customers’ bills next year.

In the long term, B.C. manufacturers are expected to benefit from harmonization and the province won’t lose the investment it might have, had it not followed Ontario’s lead and lumped sales and GST taxes together.

But next summer could be even longer and hotter when this 12 per cent tax hit comes into effect on July 1, 2010.

A recent poll by Ipsos Reid showed 85 per cent of those surveyed oppose the tax and nearly nine out of 10 believe it will hurt their finances.

We believe there are valid reasons for a harmonizing tax. However, given an economy that is barely regaining a heartbeat, the timing of this initiative could hardly be worse.