B.C.’s provincial sales tax is dead – for now – but a Chilliwack businessman is fighting a $106,000 bill after he stopped collecting the PST from customers five years ago on the advice of a B.C. government auditor.
Wide Plank Hardwood owner Hans Baer said he didn’t keep a written record of the auditor’s advice in 2005, and now the B.C. Finance Ministry has rejected his appeal of the tax assessment.
He said the company didn’t make any money by not charging the PST, and the 12-year-old firm had a clean record of diligently collecting the tax before the auditor advised dropping the PST on certain options for custom work.
“It was their (auditor’s) confusion that caused this problem,” he said. “We’re completely the victim of this.”
He said the company can’t very well go back to customers now, as the ministry suggested, and ask them to cough up the uncharged PST five years later.
“If the (Harmonized Sales Tax) had been in place five years ago, we wouldn’t be where we are today,” Baer said.
Valerie Leroux, the company’s bookkeeper, said the auditor’s advice was accepted because it was assumed he was a professional who knew his way around the complicated tax.
“You wouldn’t ask your doctor to back up his advice with documents,” she said. “They (auditors) are the professionals, that’s what we were going by.”
Baer is now asking the ministry to “revisit” the case, and to provide the company with all the documents on its file, including the auditor’s notes.
But that is proving a tall order since the PST bureaucracy was dismantled in July last year when the HST came into effect.
Chilliwack MLA John Les said he is in touch with Baer, and after a meeting to get more details he will “plug in” to the ministry and “try to get them some help.”
“I hope I can help them because obviously they are innocent victims of an arcane and difficult to understand tax,” he said.
“The PST was probably easily the most hated tax in the business sector,” he said, and small business owners in B.C. often found themselves “huge amounts in arrears” because of confusion over how to apply the tax.
“It’s no surprise small businesses are as supportive of the HST as they are,” he said.
But Les wouldn’t flatly agree that it would be politically smart for the finance minister to give the Chilliwack company a break, in light of the government’s drive to keep the HST.
“If they are eligible for a break, they should be given every consideration,” Les said.
“It’s safe to say, if we have to go back to the PST,” the outcome is going to be “very discouraging” for the company, he said.
A referendum to decide whether to dump the HST and go back to the PST is now underway with a July 22 deadline for voters to cast ballots.
With the $106,000 debt hanging over him, Baer said the “busy little company” is struggling to hold onto its share of the custom-flooring market, and several employees have lost their jobs as a result.
If market conditions were better, he said the company could cut its losses and move on, “but in times like today ... sometimes it feels to me like I just started my business all over again.”