Taxing Cross Border Shopping

How long does it take to turn a politician into a tax collector? Just under two years in power seems to be enough to convince Peace River South MLA Blair Lekstrom that his constituents should have their privacy invaded so as to make them pay BC sales tax when they shop in Alberta.

The law requires people who purchase goods outside of British Columbia, for use or consumption in British Columbia, to pay the BC sales tax (social service tax). In 1984 (how fitting) government first issued the tax bulletin on "goods purchased from out-of-province suppliers"; it was last updated in May 2001 (http://www.rev.gov.bc.ca/ctb/publications/bulletins/043.pdf).

Folks near the BC Alberta border know about cross border shopping. Regardless of what government says about collecting the sales tax, there is a big difference in most minds between smuggling a truck full of tobacco products vs. personal shopping.

The Campbell government has decided to take more aggressive steps to enforce the law. You won't find it as a government news release, but dig deeply enough into the Ministry of Provincial Revenue website and you will see an April 11th "notice" about catching tax cheats who buy big ticket items, such as snow mobiles, out of province and bring them back to BC. According to the notice manufacturers of some big ticket items are now required to provide warranty information to the BC government so the tax collector can detect whether something is bought out of province for use in BC. In big bold print the government's notice warns "BC residents have a legal obligation to pay tax on items purchased out of province and brought into BC." (http://www.rev.gov.bc.ca/ctb/notices/ATV-OOP.pdf)

There is no argument that the tax should be paid; there is no argument that few pay the tax on their cross border forays into Alberta. With the new step by the Campbell government the issue becomes how far government should be allowed to go in invading privacy in order to collect its taxes. They hope they can get out-of-province retailers and manufacturers to turn in their BC customers to the tax collector (good luck). In future, they may attempt to gain access to credit card information to see whether you bought a bottle of wine in Alberta and smuggled it back into BC without paying the BC sales tax.

The Minister of Revenue's website warns that it's not too late to come clean and avoid penalties for not paying the tax - just file the form titled "Return of Tax Due on Taxable Tangible Personal property by a Purchaser/Seller Not Registered under the Social Service Tax Act" (form FIN 428 http://www.rev.gov.bc.ca/ctb/forms/0428Fill.pdf)

In case you wondered, "tangible personal property" is defined in the Social Service Tax Act as: