A large crowd of business people was promised “a perspective you’ve not heard before” about the Harmonized Sales Tax (HST), set to go into effect on July 1, 2010.

Greater Langley Chamber of Commerce’s Tuesday dinner meeting featured a panel of speakers on the HST, discussing how it will affect business. All but one of the five panelists were totally positive about the new tax, with the fifth saying his organization supports it, but would like to see more effort made by the government to help those business sectors which will be negatively impacted.

The event was co-sponsored by the Abbotsford and Maple Ridge-Pitt Meadows chambers, and there were about 400 in attendance.

B.C. Chamber of Commerce president John Winter served as moderator for the evening. He told the crowd that the chamber has advocated the HST for years.

“As far back as 1989, when the GST was introduced, we talked about common collection of both sales taxes. In 2002, we called for harmonization, and in 2008 at our AGM, our members made the (harmonization) policy a priority,” he said.

However, Winter said his organization had no knowledge of the government’s plans until the HST was announced on July 23 — “it came as quite a surprise.”

He said 140 countries use a value-added tax (VAT) today, a sales tax paid by the ultimate consumer. This is up from less than 10 in the 1960s. In the OECD, 29 of 30 countries have a form of VAT, with the U.S. the lone exception.

“The HST will reduce business costs and compliance costs. There will be an estimated savings (to businesses) of $200 million a year in administrative costs. More tax on consumers will be partly offset by lower prices.”

Jon Garson, B.C. Chamber policy director, spoke on how the HST will affect retailers.

Garson noted that retail is the number one employer in B.C., with about 70 per cent of GDP coming from consumer spending. Retailers will immediately benefit from the HST because they will only have one set of forms to fill out instead of two.

“The core benefit, however, is that the (provincial) sales tax will virtually disappear for your business. This will save businesses in the order of $2 billion a year. These savings can be used to lower prices,” he said.

Garson said this tax saving will make B.C. a better place to invest, saying “the best way to strengthen the retail sector is to grow the economy. The negatives are far outweighed by the overall impact on the economy.”

Hugh Alley, operations manager for Langley manufacturer Alco Ventures, said the HST will make manufacturers more competitive, and that will create good-paying jobs in B.C.

Manufacturers account for about 12 per cent of GDP, with 10 per cent of the total employment in the province.

“These tend to be good jobs, with 94 per cent of them full-time, and 15 per cent higher wages.”

Alley said the HST will reduce costs for manufacturers, and many will use this saving to reinvest in their businesses and create more jobs. They can be more competitive with manufacturers from other jurisdictions.

He expects the HST will save his firm $60,000 per year, and he anticipates that this will be reinvested in the business and ultimately create four to five new jobs.

Rick Jeffery, president of Coast Forest Products Association, said his industry is only running at 50 per cent capacity because of the downturn in the economy — a downturn that began in 2006 for forest firms, when U.S. housing starts began to sag.

Ninety-five per cent of sawmill and pulp mill production goes outside Canada, and a saving in tax make firms more competitive with firms from all over the world.

“The PST adds $40 million to our costs,” he said. “The HST will help us retrieve those costs. It is the most critical tax policy change the government has made. It will lower our operating costs and preserve cash flow.”

Jeffery said the HST “is the fairest tax structure you can put in place. Those who consume more will pay more.”

John Pankratz, an Abbotsford Certified General Accountant, spoke on behalf of CGA-BC. He noted that a recent public opinion poll showed 85 per cent of those polled opposing the HST.

His association supports it because, on balance, the positives outweigh the negatives.

He said the provincial government should look more closely at the sectors of the economy which will be hardest-hit, including new home building, restaurants and home renovations.

“We are encouraging the finance minister to be open-minded and flexible, to mitigate these impacts.”

Questions ranged from the effect on government revenues to how this will impact the underground economy. Winter said government revenue will not grow unless the economy grows.

Pankratz said buyers of higher-end homes will be hit the hardest, but those buying new homes under $400,000 will not pay any more in tax. (That limit has now been boosted — see separate story)

The panelists could not say what effect the HST would have on the underground economy, but did note that the introduction of the GST did cause a spike of “cash deals” in some sectors such as home renovations.

However, they noted that taxpaying businesses can compete more effectively with these operators because they will get all the HST they pay on inputs back.