"The move to a Harmonized Sales Tax of 12 per cent will encourage business investment in British Columbia and, over time, increase employment and foster higher wages." That's what The Vancouver Sun's editorial page told readers shortly after the Campbell announced it would be introducing the HST. But that tax will likely also have an "immediate negative impact" on The Sun and other newspapers across British Columbia, according to the association that represents their interests.
Presently, newspaper and classified advertising sales are exempt from the provincial sales tax.
But the harmonized sales tax will eliminate those exemptions, threatening "the ongoing viability" of newspapers "at a time when the entire industry is in crisis."
This, according to budget consultation submission penned by the Canadian Newspaper Association.
Because of that crisis, the association has argued a seven percent increase to the cost of newspaper sales would have to be passed on to consumers.
The harmonized sales tax will also "hasten" an existing decline in classified advertising revenues.
And the industry won't see "significant offset cost savings by the elimination of PST on inputs because most newspaper costs are from labour, which sees no PST relief."
As a result, the association has urged the government to give point of sale rebates for newspapers - something the Ontario government did in November.
And it's also urged a rebate for classified advertising sales.