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HST in Ontario

Posted on 03 November 2009

There’s been a lot of stuff around lately on the upcoming Harmonized Sales Tax in Ontario. Depending on who is speaking or writing the HST is either the worst thing to happen to Ontario or the best so I decided to look into it myself.

It is clear that some things will cost more than they did, but what the anti-HST people fail to mention are:

1. Books, kids clothes and footwear, car seats and booster seats and feminine hygiene products are exempt
2. New home under $400,000 are exempt
3. All new homes will get a $24,000 rebate
4. Families with less than $160,000/year income will get $1,000 rebates for two years
5. Singles with less than $80,000/year income will get $300 rebates for two years
6. The HST will not apply to the sale of existing homes
7. Low income families will get a permanent sales tax credit of up to $260 for each adult and child per year
8. Persons with less than $80,000 of income per year will get an average reduction in their income tax of about 10%
9. Persons with less than $36,848 of income per year will get an average reduction in their income tax of about 16.5%
10. 90,000 Ontario low income tax payers will pay no income tax at all

In addition to these points, things that are not GST applicable will not be HST applicable, things which were subject to GST and PST will cost exactly the same amount as before. So in effect, we will not pay any more for anything except those things which were previouly GST applicable and PST exempt.

As far as I can see, low income earners will be better off, middle income earners will probably break about even and people who buy brand new homes costing more than half a million dollars and have really high utility bills will be worse off.

Before we get all weepy for the rich and even the middle income people, remember the 2% GST cut Sleazy Steve put through. This cut saved the rich tons of money, the middle income people a little money and the low income people virtually no money.

What many seem to forget is, sales tax is a consumption tax. The more money a person has and spends, the more tax they pay. Those with little money to spend pay little tax. This is why the GST reduction was so unfair to low income Canadians. To be truly fair, they should exempted utilities and other services that everyone uses from GST completely rather than lowering the tax on everything that most Canadians can’t afford in the first place.

So while everyone will be paying more out every month, at the end of the year when everything is factored in most people will be no worse off and a few may be better off.