On June 30th, I was driving home from a client's home inspection I noticed that every gas station I passed had insane line ups. At first I didn't get it but then realized that these Ontarians were trying to fill up in their gas tanks to save a few dollars from the dreaded HST.
The Ontario government in their infinite wisdom decided to implement the HST as of July 1st, 2010. I for one, think the implementation date is horribly ironic when you consider many Canadians already feel they are overtaxed (myself included) and don't see the value of all the taxes they pay reflected in the services they receive and in the wake of government spending scandals such as eHealth.
According to the Ontario Government's web page devoted to the HST; "Ontario's comprehensive tax package, including the harmonized sales tax, will create jobs by making Ontario more competitive and provide personal tax relief." .* They also state that the current structure hurts Ontario's economy and job creation due to the fact that sales tax is hidden in the cost of doing business in Ontario. The HST, they argure will remove this hidden tax by refunding sales tax based on most business inputs.
Theoretically, lower business taxes should mean lower prices for consumers, Lower business taxes should attract increased business investment which in turn will increase jobs and incomes for Canadians.
However in a global economy just now recovering from a severe worldwide recession will a small savings in business tax really attract that much business investment from companies just getting back on their feet? According to the Ontario government, yes. A report from Jack Mintz estimates "estimates that these tax changes, together with other recent tax measures, will lead to $47 billion in increased capital investment and create 591,000 new jobs within 10 years."*
Now that is all fine and good that new jobs will be created and that business tax will be lowered but what does the HST mean to you? Although many items remain at similar tax rates; below are some items that will cost more as of July 1st.
- Internet Access Services
- Cleaning Services
- Landscaping Services
- Hotel Rooms
- Taxis
- Airline Tickets
- Magazines
- Home Renovations
- New Homes over $400,000
- Real Estate Commissions
- Lawyer Fees
- Cigarettes
It is important to note that tax rates do not change for over 93% of all items/services but at a time when many Canadians are struggling to get by I hope that what the Ontario Government is promising does happen and this tax does not just add to Ontario's overwhelming tax burden.
What do you think? Will the HST hurt or save Ontario? Would love to hear from others. Feel free to leave comments or tweet me at www.twitter.com/marianogigante
As always, you can read more at www.marianogigante.com
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