BCBC welcomes pause on PST expansion, calls for permanent cancellation

The Business Council of British Columbia (BCBC) welcomes the provincial government's decision to pause the planned expansion of the provincial sales tax (PST) to professional services. Earlier this year, BCBC joined other business groups in calling for the expansion to be scrapped, and we appreciate the government responding to concerns about the additional costs it would impose on businesses and projects across the province. 

The expansion would make services such as accounting, security, and engineering more expensive for businesses. Unlike the GST or HST, businesses generally cannot recover the PST they pay on their purchases through input tax credits. As a result, the tax becomes embedded in the cost of operating a business and is passed along, raising the cost of everything from daily operations to major capital projects. 

While we appreciate the pause, we call on the government to permanently cancel the PST expansion. BCBC also continues to urge further PST reform, including our key recommendation of removing PST off capital expenses.  

Research shows that the PST on capital purchases is one of B.C.’s most significant tax barriers to new investment, and that relieving PST on productive capital could also strengthen household incomes. 2024 modelling estimated that removing PST from capital investment could raise long-run hourly earnings by 1.1%–2.7%, equivalent to approximately $700–$1,700 annually per worker. These findings illustrate the link between stronger incentives for businesses to invest and the earning potential of the people who use that capital.