Back in 1997 New Brunswick, Nova Scotia and Newfoundland all implemented HST. While the pre-hst situation between Atlantic Canada, Ontario and British Columbia are quite different, we can look back on how HST has affected these three provinces.

A report by the CD Howe Institute explains that the harmonized says tax led to an increase in capital investment by businesses in New Brunswick, Nova Scotia and Newfoundland. PST (provincial sales tax) was supposed to be a retail tax; it was supposed to be paid at the consumer level. However, many businesses ended up paying PST on the essentials needed to operate a business, and there was no refund policy or structure in place to correct the issue. Businesses had to come up with a way to make up for the extra expense, which meant raising their prices. This was naturally passed along to the consumer, where once again, PST was paid on the final product.

When comparing the New Brunswick, Nova Scotia and Newfound to other provinces without HST, particularly Prince Edward Island, consumer prices fell approximately 1% in the first year after HST was implemented.

One significant difference between the implementation of HST in these three Atlantic provinces versus Ontario and British Columbia is that in Atlantic Canada, restaurants were already charging PST. This means that HST didn’t cause an immediate jump in price for your favorite Starbucks coffee, but HST in BC and Ontario is a different story.