It’s now official: both Queen’s Park and Ottawa passed legislation regarding the harmonized sales tax (HST). The new measure will come into force in summer 2010 in Ontario.
The HST will blend the Goods and Services Tax (GST) and the retail sales tax (RST) on all goods and services that are subject to the GST. Until now, the GST and the RST are governed under different pieces of legislation; the GST under the Excise Tax Act,* the RST under the Retail Sales Act.^
Because of the different regimes, items that are subject to the GST may not be subject to the RST. For example, books and legal services are GST-taxable but are exempted under the RST.
After the two taxes become blended into the HST, all GST-taxable items become HST-taxable. Many items and most services currently exempted under the RST will soon become taxable under the HST regime. Unfortunately, it means the prices of books and legal services will jump 8%.
A piece of good news: some old exemptions on RST remain in place. Newspapers and meals under $4 are not subject to the new HST.
No one believes that Ontario will emerge from this recession the same as it went in. We need to become more competitive.
A report by TD Bank estimates the HST will reduce cost of doing business in Ontario by roughly $5.3 billion and that the majority of these savings will be passed on to customers within the first year. In fact, the majority of items you purchase – 80 percent – will see no tax change at all.
A recent report by economist Jack Mintz confirms that Ontario needs to reform its tax system to create jobs and put Ontario back on its feet. It says, as a result of the HST, within 10 years Ontario would see:
o An estimated 591,000 additional new jobs
o Increased capital investment of $47 billion
o Increased overall annual worker incomes of up to 8.8 per cent, or $29.4billion
We have a choice: we can refuse to fix what’s broken, resign ourselves to the idea that Ontario will be less competitive or we can move forward and get the jobs Ontario needs.
Please visit: http://sites.google.com/site/thetruthaboutthehst/