PST on Legal Services & Legal Aid
Currently, most services are exempt from Provincial Sales Tax (PST), but legal services are not. This means that any legal bill is subject to a 7% PST, effectively inflating the cost as if it were a new television. While this additional cost may be a minor concern for corporations and affluent clients, it represents a significant burden for the average client, particularly those already in financial distress.
The impact of this tax becomes even more pronounced when comparing the cost of legal services to that of other professionals. For instance, if an accountant, an engineer, and a lawyer are all charging the same hourly rate for their services, the lawyer’s bill will be 7% higher due to PST. This discrepancy can be particularly frustrating and burdensome for clients who need legal assistance but are also facing financial difficulties.
Historically, the justification for applying PST to legal services was that the revenue would support legal aid programs. However, since approximately 2002, the percentage of PST revenue allocated to legal aid has decreased significantly, with estimates suggesting that less than 50% of the collected PST now goes to legal aid services.
As a Member of the Legislative Assembly (MLA), I propose the following changes to address this issue:
Exempt Family Law and Wills from PST: By removing PST from family law and estate planning services, we can alleviate the financial burden on individuals who are often navigating challenging and emotionally charged circumstances. This exemption would help make essential legal services more affordable and accessible for those who need them most.
Ensure 100% of Remaining PST Revenue Goes to Legal Aid: Legal aid has been underfunding leaving many British Columbians without adequate coverage. The least government can do is ensure that all remaining PST revenue from legal services is dedicated exclusively to funding legal aid programs. This change would enhance the effectiveness of legal aid services and ensure that the tax collected fulfills its intended purpose of supporting those in need.
By addressing the tax burden on legal services and ensuring that funds are used effectively, we can improve access to justice for those who need it most and ensure that the resources collected are used for their intended purpose.