The HST bill was recently passed to combine the two taxes for Ontario. And no, I do not mean Hubble Space Telescope but the Harmonized Sales Tax bill. This means that everything will cost more because it will combine the GST and PST and apply the 13% tax on almost everything. The things that were exempted from the provincial sales tax will now be taxed under this bill. The government says that raising taxes will help create over half a million jobs within the next decade because it will save business millions if not billions of dollars. If it saves business money, who’s to say that they’ll pass on that savings to the consumer?
The way this helps business is that they don’t have to pay taxes on things that they purchase. In the process of making a product, each step is taxed. The company that harvests the raw materials sells that material to the next company but taxes them in the process. The company that uses the material to create the product sells the products to the retailers which is also taxed. And finally the retailers sells the product to the consumers which gets taxed again. What the HST does, I think is eliminate all the taxes that the businesses are charging each other when there’s an exchange of materials and supplies.
So if these savings are not passed on to the consumer, of course we’re all going to be outraged. Companies are in business of making profit so I don’ think they’ll be nice enough to give us a discount. Lately, I’ve been seeing prices go up not down. For example, the price of gas will now go up because there will be an additional tax on it. Services like barber shops where you didn’t see taxes before will now be taxed. But from what I hear, there may be some things that might be exempted. Coffee might be one of those things but I can’t confirm that.
Although it looks pretty bad on the consumer side, personally, it might have some advantages. Along with the introduction of the HST there is a tax cut for personal income. Individuals could see a tax cut as high as 10%.
Nobody likes to pay more than they have to but hopefully the tax cut will help balance things out. This legislation won’t go into effect until July 2010 so we won’t have to worry about it for the first half of the year. Whatever the outcome is, I’m going to have see if I can offset a few things financially.