what is the harmonized sales tax hst 
canada s harmonized sales tax hst is a consumption tax paid by local consumers and businesses as the name implies it harmonizes combines the nation s federal goods and services tax and various provincial sales taxes five canadian provinces use the hst other areas of canada use a similar goods and services tax gst the hst was implemented in 1997 1 proponents of the tax argue that it improves the competitiveness of canadian businesses by simplifying their administrative costs leading to lower prices for consumers the hst is collected by the canada revenue agency cra which then remits the appropriate amounts to the participating provinces who pays the hst in canada the hst is paid by purchasers at the point of sale pos the vendor collects the tax proceeds by adding the hst rate to the cost of goods and services and then remits the collected tax to the canada revenue agency cra the tax division of the federal government the cra later allocates the provincial portion of the hst to the respective province s government 2prior to the hst s introduction in 1997 canadian sales taxes were divided into the federal sales tax gst and the provincial sales tax pst each province had its own rates resulting in significant differences in sales taxes throughout canada the concept behind the hst was to streamline the recording and collection of federal and provincial sales taxes by combining them into a single consistent levy across the country advocates argue that it should reduce costs for businesses and ultimately customers since it simplifies their sales tax related bookkeeping the tax rate of the hst in all participating provinces except ontario where it is 13 3unfortunately in practice the hst can often complicate companies lives instead while the aim was to create a national sales tax the canadian government made adoption of the hst optional and many provinces opted not to keeping their separate systems and rates instead as a result businesses operating across provincial lines or nationwide either in physical locations or via ecommerce have to deal with disparities in tax rates depending on whether the customer is based in an hst province or a gst pst province while the gst is 5 everywhere the pst can range from 6 to 9 975 4canadian provinces and the hstfive of canada s 13 provinces use the harmonized sales tax of the remaining canadian provinces british columbia saskatchewan qu bec and manitoba apply the provincial system in addition to the separate federal sales tax several others apply only the federal goods and services sales tax and do not impose local sales taxes alberta northwest territories nunavut and yukon 8british columbia adopted the hst in 2010 but then abandoned it three years later reinstating its provincial sales tax system after an estimated 55 of the province s residents voted against the system 9registering and collecting the hstit is the responsibility of canadian business owners located in one of the five participating provinces to collect and remit the hst to start applying the sales tax the business operator must register for a gst hst account through the cra provided that the business makes 30 000 or more per year in total revenue each province established its own percentage for pst collection and harmonized it with the gst when it joined the hst program so the exact amount of the hst could differ depending on which of the five provinces a business operates in originally the rate ranged from 13 to 15 but now almost every province imposes 15 so called small suppliers business owners with firms earning less than 30 000 in annual revenue are not required to charge or remit the hst however they can still voluntarily register to collect the tax since doing so allows them to claim input tax credits on the goods and services that they purchase in running their operations 2exempted goods and serviceswhile many goods and services are subject to the hst some are zero rated or tax exempt a zero rated commodity or service is one that has an hst rate of 0 these include products like basic groceries books and many agricultural and fishery goods foreign purchasers of canadian products do not have to pay the hst provided that the goods or services will be solely used outside of the country however nonresidents visiting canada such as tourists are required to pay the hst in some cases they may qualify for an hst rebate 2the hst s effect on taxpayersthere is still a constant debate as to how the hst impacts consumers and taxpayers critics claim that the hst shifts the tax burden from businesses to consumers proponents of the hst argue that it actually lowers taxes they say that the hst system reduces the cost of doing business which effectively lowers the prices of consumer goods and services 