The Commerce Times

The great Harmonized Sales Tax debate

Only two things are certain in life: death and taxes, and on July 1, 2010, Ontarians can expect the new Harmonized Sales Tax (HST) to take effect. The people of this province can expect to pay more on many things that were previously tax-exempt.

Over the last couple of months this topic has been discussed thoroughly. The reality is that many people still have no idea what HST is and how it will affect them.

The Harmonized Sales Tax is the combination of the five per cent Goods and Services Sales Tax (GST) and the eight per cent Provincial Sales Tax (PST) into a single 13 percent sales tax.

“Current opposition in Ontario to HST is at 74 per cent”

Here are some of the items we can expect to pay more for when the HST is in effect next year. When you fill on gas, you will be paying more. When you buy that cup of coffee on your way to school or work you will be paying more. Traveling home in a taxi will cost more.

Trying to get fit and healthy this year will also become more expensive when the cost of gym memberships and vitamins rise, thanks to the HST. Booking a campground will cost even more than it already does. Finally, when you seek out an accountant to help you figure out how the HST will affect you, expect to pay more because their services will also be taxed.

Canada’s economy is slowly but surely on its way to recovery and this new harmonization is the last thing we need. How can people expect to get their finances back on track when many frequently used items will cost more? This means that people will continue to save and not spend, potentially prolonging a full recovery.

Ontario’s real estate market has just begun to mend after taking a hit the last little while. According to the Real Estate Board of Toronto, the city’s housing market was up 16 per cent from the same time last year. The new HST will apply to new homes (which were previously exempted from PST) and to all home closing costs thus adding to the cost of buying a home in Ontario. While the new tax will not affect previously owned homes, the HST will be included in other parts of the purchase. These will include the legal fees, real estate fees, appraisals, surveys and legal assistance.

Businesses can expect to bear the brunt of the new HST tax. When the odds are stacked so high against new businesses, this tax will only serve to make it more difficult for them to survive in Ontario. Financial companies engaged in exempted activities (i.e. banks, insurance companies) that are not entitled to claim credits, will see an increase of eight per cent in respect to many of their costs, such as accounting fees, other service fees, and commercial rent. How is Toronto to stay competitive as Canada’s financial centre when these companies are paying ridiculous costs to stay here?

It also does not help that Ontario’s government has been unwilling to consult all Ontarians across the province to hear their views. According to CanWest News Service, current opposition in Ontario to HST is at 74 per cent.

The Harmonized Sales Tax has far too many adverse effects to even be considered a good option. Alas, there is nothing we can do about it as the bill was passed on December 18, 2009. All Ontarians can do now is wait for things to become more expensive on Canada Day this year.

Read the other side of the debate >>>