More taxes

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.

4 replies on “More taxes”

  1. 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.

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  2. George,

    From a consumer’s perspective, a higher tax isn’t good. The thing that has a lot of people up in arms is the fact that they now have to pay more taxes. The one thing that’s noticeable for most is the tax on their utility bill. If they have to pay more for that, it will mean they won’t be spending that money elsewhere. So if they’re not spending that money else where, I don’t see how it will create jobs.

    There just isn’t enough incentive for this tax. So what if purchases under $4.99 are exempted from the tax? There aren’t many places left where you can get anything for that price.

    And those companies that do save, if TD says they “will” pass on that savings to consumers, I think they need to shop around some more.

    The government may think that this is good for the economy but history shows that they like to screw with us. The HST is supposedly in place to help the poor but I don’t think the poor can afford to buy anything if the prices are higher.

  3. You pay tax to government and when you are retired. You will get money from government. it is unlike me living in Cambodia, I pay tax to government but i will get nothing from government when i am old or and cannot work for private company.

  4. Vutha,

    Our pension plan is deducted from our employee pay. The HST is a tax that is applied when you purchase things from retail stores. I think the pension plan alone isn’t enough to cover the basic cost of living in Canada. That’s why we have a retirement savings plan program with our banks. It’s a program where you take a part of your pay and put it away until you retire. If the government isn’t doing anything to help you with retirement, you might want to start saving on your own.

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