HST a necessary consumer burden?

Report displays increase in large amount of Ontario taxes thanks to HST - but will it bring a prosperous economy to consumers in the future?

The latest in economic recovery strategies will have both Ontario and British Columbia consumers turning out their pockets come July 1st 2010.

The Government of Ontario announced a plan earlier this year to unite the federal goods and services tax (GST) and provincial sales tax (PST) under a new, harmonized system known as HST. This tax reform implements a permanent 13% charge which, it has recently been proposed, will increase the cost of professional services and personal goods such as morning coffees, haircuts and internet access fees.

Toronto-Dominion Bank published a research report yesterday revealing heavy price tags that are soon to be thrust upon consumers. The findings could have very well thrown a political speed bump in the Liberals' efforts to win over residents of the St. Paul's region in Thursday's by-election; the result, the Party claims, was a crucial indicator of public response to premier Dalton McGuinty's HST reform. The report appears to conclude that the new reform is very much a government-sponsored tax grab.

However, the authors - TD's chief economist Don Drummond and Diana Petramala - also believe the policy will help the provinces in the long run.

"The increase in the consumer price level needs to be put into the broader context of the widely-held view, with which we concur, that a value-added tax is a more efficient tax than the provincial retail sales taxes currently in place in both Ontario and British Columbia," they stated.

While that may be true, pre-election turbulence has rattled voters nation-wide, who have cast Ontario Premier McGuinty and Prime Minister Stephen Harper into an unfavourable spotlight - Harper having "pushed the governments of both British Columbia and Ontario to implement [a harmonized sales tax system]," according to Liberal Economic analyst John McCallum.

Combined tax systems have been implemented in Quebec, Nova Scotia, Newfoundland and Labrador since the 1990's - the Liberals, no doubt, will reap all they can from these examples. But ultimately, businesses will rake in the savings while consumers will be hit hard with an increase in expenses - that is, unless initial costs are reduced. This is a main concern that even McGuinty, who had avoided the subject until this year, has had trouble coming to terms with.

"I can say that any time you're dealing with a tax measure," the Premier said, "it's easy to be against it and it's harder to be for it. And that's not surprising."




I'll probably edit this a bit tomorrow, but I thought I'd post what I have regarding my thoughts on this topic anyway. This is more of a journalism piece than an opinion-based one, but I did want to point out that during my research, I came across some very different articles. The subtleties of the writer's choice of words and quotes greatly influenced my impression while reading, something that I both tried to include and exclude at different points in my own writing.

Something else I came across today was an article taken from the CityNews website which included the following information: the Ontario budget plan, released on March 26th 2009, also stated that the government would be sending three $1000 cheques from the time of the tax reform installment until June 2011 to families earning an income of less than $160 000 a year. Single incomes of 80 000 or less will receive only $300.

This article was clearly aimed at riling up tax payers, so to find this information was a bit of a relief to me - as well as surprising.

But the question still remains; Is the HST a mere Liberal tax grab? If so, why is the federal opposition (whose politicians are blaming the Liberals for implementing a tax grab) dumping millions into the funding of this project?

This is something i might include when i come back to edit. but for now, i hope this piece educated you at least a little bit, about the danger HST poses to the people of Ontario/BC as well as to political leaders.