What do you think of B.C. and Ontario introducing a harmonized sales tax? - Macleans.ca

What do you think of B.C. and Ontario introducing a harmonized sales tax?


Filed under:

What do you think of B.C. and Ontario introducing a harmonized sales tax?

  1. There's a missing option:

    It's good economic policy, but provincial programs that make sense, that don't exist at the federal level, are being destroyed for it. I am therefore conflicted.

    • With you my friend the boat has sailed and you are still on the dock, look through all the smoke and mirrors and open your mind.

  2. The only argument I've heard for why this is supposedly great for the economy is that the PST taxes inputs and outputs, whereas the HST only taxes outputs. Can't say this strikes me as an enormous benefit. For starters, I don't think any consumer seriously believes that companies are going to pass the savings onto them. Secondly, it doesn't change the fact that service-oriented businesses like mine don't benefit from the input tax credit, so our prices just go up 7%. Thirdly, a certain amount of the cost benefit is eaten up by the increased cost of administration. …so as far as I can see, it all adds up to prices going up, while the provinces lose sales tax revenue and lose autonomy over their sales tax. Just one more way to tie our hands fiscally so that the only solution to future budget short falls is to…oh…cut health care I guess.

    • True, it's pretty much not believable that businesses are going to pass on savings to consumers. But in the long run, if businesses in ON and BC are "making" a bigger profit then it could help employment since they'll have more resources with which to hire, and investment figures should climb. I also remain skeptical as to whether income taxes will truly be reduced by an equal offset amount. The only think that shouldn't be a problem is administration– if anything, it should easier to now submit sales taxes to one authority instead of two. A mixed bag at best.

      • I wish I shared your optimism about increased employment, Derek, but I'm afraid I don't. Indeed, it may attract some companies to invest in Canada, who then hire our workers. However, the loss of government revenue will lead to the continued elimination of high-quality public sector jobs, so I'd say we come out even in that department and worse everywhere else–because those public sector jobs are the ones that provide the services our taxes are supposed to pay for. What is the long-term benefit to Canadians of attracting foreign investment at such bargain basement prices that the government is no longer able to provide for its citizens–even as we regular citizens are expected to shoulder more of the tax burden? Sorry to sound so unfashionably left-wing, but I value factors like quality of life as much, if not more, than I value economic growth. There has to be a balance.

      • Submit sales tax to one authority? I hope this means all government employees that process PST will now get their pink slips as they are no longer needed. That would save money for tax payers.

  3. This just in; the United Kingdom just raised their VAT from 17.5% to 20%. British Columbia and Ontario to follow in two years once their agreement to keep rates at 12% and 13% with the Federal government expires.


    • I guess it's soon becoming time for that whole underground economy thing to kick into high gear.

  4. Never a thought to reduce public salaries to a level at least pretending to be equal to the private sector. Just take, take, take. Ryan is right, the black market will flourish.

  5. This can't be a tax grab, since both BC and Ontario will likely realize less revenue as a result, at least initially. That is why the feds had to bribe them with "transition" money. Removing the PST on inputs also removes the compounded PST further down the chain, which is why revenue will likely drop. This compounding is precisely where the PSTs do their damage economically. A value added tax like the GST avoids those market distortions.

    • Yeah. Then ONLY the consumer gets screwed. Business doesn't pay a cent.

      • Not true. Business never has and never will pay tax. It is an operating expense that simply gets passed on to the end user. If you raise business taxes they will simply raise prices to cover the extra cost until a point is reached where consumers either can't or won't buy the product. At this point one of two things happens, either the business goes bankrupt and their employees loose their jobs or the company moves operations to a more user friendly regime and takes the jobs elsewhere. Either way we all loose.
        The answer is to stop demanding ever more and expensive government services.

    • Talk about rose coloured glasses. This will be the largest tax grab in Ontario's history. An 8% tax has just been added to the service businesses in this province. After McLiar and Ontario Hydro destroyed the manufacturing sector in Ontario he has to find a new source of cash for his prolific spending and bending over to the unions. A 5 or 6% PST apparently would have been revenue neutral. The timing is terrible, a major damper on our struggling economy.

  6. i run a service oriented business in ontario and dalton mcasshole has made no provission for companies like mine who will lose a ton of business with this tax so before he puts me out of business i will shut down the business july first and with the money i save move out of province

  7. "It's a tax grab" would've sufficed.

    Could you not perhaps consign your 'filthies' and 'hates' to an obviously badly needed compendium of outdated fifth estate notions of readers' hypermanic passions? Or izzat asking a bit too much of Maclean's hyperbole-driven recent journalism school grads?

  8. I run a small business and the HST is very good for business and in the long run will help create more wealth and jobs. We have moved production from the US to Canada in part because of the way the GST works, taxing only outputs. This reduces our costs and gives us (at an equal exchange rate) an 8 to 10% advantage over Texas, where we previously did most of our work, in the provinces that have the equivalent of the HST, ie maritimes, Quebec and Alberta . The advantage in Ontario and BC is almost nill because the provincial component is not a valued added tax as is the GST. Adopting the HST will make both Ontario and BC more competitive as a place to do business, especially manufacturing. We have been considering moving or setting up an affiliate office in BC and the lack of the HST was causing us to hesitate. In the long run this is one of the best ways to tax. Short term pain for long term gain. It is a bit like cutting the deficit back in the mid 90's. Lots of protest then, but we are certainly happy today that the difficult decisions that had to be made were made then. Our economy would be much worse off if these decisions had not been made. Same thing for the HST.

    • Just out of curiosity, if you're in manufacturing, as you claim to be, and if you're the sort of company that just up and moves your shop to wherever the cost of doing business is cheapest (despite being a "small business"), how come you're not doing your manufacturing in China or Korea? I don't mean to sound glib, but your comment has a bit of an inauthentic ring to it.

      And even if your situation is genuine, your positive experiences will be offset by the hits taken by service sectors. All the HST does is up my fees by 7% and drive away customers that can't afford the difference. Then I can't afford the people I hire.

      • You say that all the HST is up your fees by 7%, but now that you will not be paying PST anymore, the cost of many of your inputs will fall by 7%. Could you not pass those savings on to your customers? Those savings would offset what your customers must pay in additional HST.

    • Glad that people from Texas are taking advantage of the Liberal tax grab. Meanwhile the Ontario taxpayer is hit with increases on the things we cannot do without, like electricity and home heating and gas for our cars. People employed in the civil service, or government sector don't care, they are all overpaid compared to the working stiff. The pensioners whose parents and grandparents built and fought for this country can't even afford to stay in their homes because the taxes and utilities are double their pensions.

    • Every small business owner I've talked to–from convenience stores to restaurants to ALL service-oriented businesses like doctors and accountants–all are AGAINST the HST, and even moresoed since the government has yet again enacted an idiotic and business-killing policy without bothering to consider who it hurts, and how much local economies will suffer after so many of those small businesses–THE LIFEBLOOD OF THE ECONOMY–get taxed out of business.

      Of course, this is a great benefit to corporations and foreign companies like WalMart, who don't pay taxes anyway…they'll just collect the taxes for the government and be happy and just as profitable as before.

  9. Small Businessesare going to collect the HST and not evn pay the govtt. the entire amount. They already do not pay the entire GST collected, they do not pay full income taxes. The salried workers are doing that for them while they pay off thier homes

    • Small business accounting fees are going to go up by $1000 to $1500 per business…in addition to their supplies ALL going up…in addition to the fact that if they don't comply with the new regulations to rip off their customers for ther government, they qwill be AUDITED, and charged for the taxes they "should have collected" as well as fines and court costs…all of which add up to the idea that "If you don't pay for our protection, we're going to bankrupt you."

      The HST is nothing more than a protection racket…and they use all know that fact the second that they passed it behind closed doors, without public consent of consultation.

      The people destroying Canada right now shouldn't just be kicked out of office, they need to be put in front of a firing squad…

      • Neither one of you has the slightest clue.

  10. I've done an assessment on expected cost savings for our financial services business in Ontario. It is insignificant because, except for office supplies and a few other things, our big costs are salaries and other services which have not previously charged PST. Nevertheless, we have decided to reduce our fees slightly, because we just think the optics of the HST are terrible. This is especially true for our industry which has been wreaked by bad markets and bad behaviour. Our clients don't really care that it`s a tax we are required to collect. To them, our fees would otherwise just go up 8%.

    • I wouldn't do that if I were you…if the government sees your income remaining stable after the HST is in place, they WILL AUDIT YOU, because they expect to see an 8% hike in the money you bring in. If your reported income doesn't match, you WILL BE AUDITED and if they think that you've lowered your prices in order to short them tax money…your business is DONE!

      Kiss your future goodbye if you are so evil a criminal as to deny them whtat you owe them…after all, you're just a slave working for them…they don't work for us any more.

  11. Since we must have taxes, I prefer consumption taxes over income taxes. Taxing income penalizes incentive to work harder and earn more thus reducing productivity. Have seen many people turn down work because the governments share was greater than theirs. Taxing income also reduces the incentive to save and invest which reduces productivity, wealth generation and jobs.
    Arguments versus fairness with the ability are moot once rebates to low income earners are taken into account. Porches and Ferraris aren't purchased by low income earners.

  12. We've been bought for a handfull of beans.
    The first rebate comes out before the tax kicks in, so no one complains TOO much.

  13. Just move to Alberta or the Territories where you only have to pay GST!!

  14. First it is smart policy. It should have been done years ago when the GST replaced the Federal Sales tax. Having been a small business person for 40 years, the time that it would have saved me by only having to do one set of taxes per month would easily have bought me a new Lincoln by now, maybe a few.

    • Thank you for demonstrating exactly why people don't want this tax. The poor need food far more than you need your Lincoln. It's nice to know that future small business owners like yourself might get a nice shiny new Lincoln on the backs of people who can't afford to feed their kids. I hope you feel good about that.

      • you really come off as non-thinking dumbass, in your simple world anybody owning a business succeeds off the backs of the poor and any poor person is trying so hard but just can't quite make it. things are a little more complex than that and this is canada there is always help for those who are willing to ask. yes times can be tough but creating an efficient economy is the only way to sustainably move a country forward.

    • You must have a slow computer system or a slow book keeper. Dealing with taxes and submitting take about 15 minutes per month whether one tax or two taxes. Or maybe you have a very expensive book keeper.

  15. I have been following all the news – unlike gst and the hst in Ont. BC sold us all out for business – and Tax – no refund, not even pension rated. It will cost me at least $500 for minimal services per year be it utilities or health care most of which is eroded in this province and sold to private enterprize. On my cpp, oas,and gis – this is going to complicate my life even more as one can not live on $1400 a month…and keep paying hidden taxes be it hst on top of the carbon tax (12% neutral?)
    and etc.
    I simply feel like BC was sold cheaper than the G8 summit of one billion dollar first time bonus to province to cover other expenses like the olympics.. How can you expect business to deduct savings and pass to consumers when the gov. affiliated control things like liquor etc. will just increase in tax……..no savings – I'd have to be an idiot to believe what they say. the only people that gain are gov. their workers in administration and business and the little people pay and the big ones will find tax loopholes for corporations.

  16. I notice that both provincial liberal governments(BC and Ontario) directly lie to their electorate before implementing the HST and are too scared to seek a mandate beforehand. That in English is called deceipt while they display utter hipocracy. To make matters worse, the federal conservative govermment has added $6B to the national debt to bribe the provincial govermnments to implement the HST and we will have to pay that deficet off as well. It's just a deceiptful tax grab from potiticians of all strips. I for one will not be voting again after sixty-five years of never missing a vote.

    • No, that was only BC:

      "Difference #2 Between British Columbia and Ontario HST Taxes – Election Promises
      Secondly, how the two harmonized sales taxes were introduced and announced were certainly very different. In British Columbia, the BC Liberal Government had promised NOT to increase taxes or implement the harmonization of the provincial PST and the federal GST during their last election campaign. On the contrary, Ontario Premier Dalton McGuinty had unveiled the Ontario HST at 13% in March this year prior to their election. Although the Ontario public support for Dalton McGuinty dropped double digits, he was honest in terms of announcing the harmonization of the Ontario HST prior to the election. In addition, even with all the scandals in Ontario as well as the economic fallout, Dalton McGuinty continued to gain supporters and the support of the public with the announcement of the Ontario HST. In contrast, the BC Liberal Government, hoping for the same reaction, fell short of their promise to keep or lower taxes in the province. On the contrary, the 12% HST will effectively hike up the price of the majority of goods, services and products in BC, leading to a huge tax burden on everyone. The BC Liberals broke their election promise. The Ontario Government mentioned the benefits of the Ontario HST during their last election campaign and were voted into office. Therefore, the implementation of the Ontario HST did not come as a surprise to Ontarians, whereas the BC HST came as a complete surprise to anyone living in British Columbia."

      Source: http://www.vancouver-real-estate-direct.com/HST/B

  17. the simple and most agredious aspect is those who were voted in did not even respect the voters to ask first before going ahead with it. In this its wrong as they work for us not their own goals. Secondly of the clients i have which will be impacted by this the general consensus is it is going to hurt them bad. The offest of good does not even compare to the amount of bad i have heard. Hopefully those who created this will also end up answering to those they should in a way which resets the political front in BC and not the current ordained from above concept the Liberal seem to arrogantly favour.

  18. From BC
    We pay GST! We pay PST! Now lets combine them and call HST. What the heck is the damn difference!
    Well our media sure went to great lengths to give the public every little example of where a purchase might go up a little. Of course our BC media would never give examples of where the tax would save on items. Gee wonder where they stand on the issue.
    This whole thing is a mess. First to blame would be the BC Liberals and BC media. Gov. claims its better for BC. We get an extra billion dollars from the feds, create jobs blah blah blah. How and why? Well we the people are too stupid to understand those questions so the Liberals refused to explain. Or maybe the media didn't want to ask the questions to present a better answer? Its much easier to stir emotions by presenting the negatives. When it comes to tax that is very easy to do. Whether the tax is good or not.
    The problem I have with the issue is that the people of BC are notorious for whining and whining for more money on social issues. Schools, Hospitals, child care and the list goes on and on. Even though our provincial government increases spending on these programs every year. Yet these are the morons running around trying to smash the tax. Morons backed by the selfish half retarded NDP! The same NDP who would raise taxes anyway to pay for all the lavish and endless social spending they would love to do to keep power. Bill Vandersam should be dragged out into the middle of the street and targeted with cream pies for ever lining his name up next the NDP.
    Citizens of BC need to look in the mirror and decide want they want. Can't have more money for schools, hospitals etc without paying for it. There is no magic rich people you can tax more (the ever tired cry of a left wing nut) just ourselves.

    • What's the difference? Here are a few:

      1. There was no PST on food. Food–which even the poorest of folks can't live without–will now be 7% more expensive.
      2. There was no PST on services. Everything from accounting, to janitorial services and automobile repair will be 7% more expensive.
      3. There was no PST on buying homes. Now there is.

      As for people "whining" about wanting the government to pay for services and not increase taxes, here are a few options we might prefer they consider first:

      1. Stop carving up profitable crown corporations like BC Hydro
      2. Don't get yourself elected 10 years ago by promising a tax cut everyone knew damn well we couldn't afford
      3. Stop raising MP salaries while everyone else goes without.
      4. Stop wasting billions on vanity projects like the Olympics and Fake Lakes.

      Maybe if the population saw government exercising the kind of common sense in its own budgeting that we all have to in ours, we'd feel a bit more sympathetic if it told us it needed more money.

  19. Get over it…here in NB we have paid the HST for years. Join the "taxed out" crowd!

  20. As a professional coach of amateur sport, I am so disappointed with the all encompassing tax. I understand the business of the tax but fail to see why it should be applied to things like childrens sports. On one hand we have a tax rebate to supplement the cost of keeping our kids active (and healthy…thus lowering the long term burdon on our health care system…I could argue this for hours…). On the other hand we have the increased expense of the HST added to the cost of renting facilities like fields, diamonds and arenas and any lessons/coaching you pay for will also have the HST tacked on. The HST will put organized sport out of reach for that many more Ontario kids.

  21. Anyone that thinks that the HST is bad should read this. http://bit.ly/9PXw33

  22. Rolls Royce governments everywhere result in an insatiable demand for more tax money and ultimately it will bring our society ot its' knees. Reduce the size and cost of government and then look to steal more money. Reducing taxes on business is always a good idea as they are the only ones who create REAL jobs. Government 'jobs' are just multiplying the parasites.

  23. McGuinty who happens to be my member in Ottawa South is a liar.
    He lied about the massive OHIP tax increase and has now introduced the deceitful HST which again is a huge tax grab from Ontarians.
    The Ontario electorate are a bunch of sheep. At least in BC the electorate have rebelled against their HST and it will go to a vote that will most likely negate it.
    Ontarians will probably vote for Doltin' Dalton again…pathetic.

  24. I don't see how the governments will realize less revenue through this latest tax grab. It does not seem that people are taking into consideration that all investments (mutual and segregated funds) which range in the billions, will now be subject to 12% or 13% tax instead of just the GST. These are additional fees that everyone was not subject to prior to July 1.

    So while one hand of the government talks about how important it is for people to save more for retirement, the other hand is now dipping even more into everyone's pockets to effectively further reduce the returns that the presently insufficient investments will earn.

  25. Seniors have less to live on. That's my case anyway.

  26. Taxes are supposed to serve the people's needs and not those of the elites on a permanent party like the expensive summit in Toronto. While people are trying to make ends meet, our prime minister is trying to rationalize his waste of time summits G8 and G20 that amounts to wishfull thinking from a bunch of overstuffed fat cats that pretend to be at the head of their respective countries also wasting tax payers money while some people are starving. Imagine even France's president Sarkozy brags that he can waste 10 times less money than our PM on the same useless summit. If we are to waste tax payers money we should at least get to choose where. Also imagine how much people we could help around the world in direct services, health care and food with 1.1 BILLION dollars plus for each 2 or 3 days spent on world summit partys pretending to solve problems of the world. Maybe if our politicians put these large amounts of money where their mouths are, humanities problems would be solved long ago.