The HST is better than the GST and PST it replaces because it allows businesses to flow-through the tax and in theory at least should require fewer government employees to process it (but, don't hold your breath).
All taxes paid by businesses are, ultimately paid for by consumers. So, if it will benefit Ontario businesses, I am for it.
However,
a) I distrust the Ontario government when it says it will be revenue-neutral.
b) Taxes are too high in Ontario.
c) Tax monies are inefficiently spent.
d) The fact remains that Canadian businesses collecting and remitting either GST or HST act as unpaid tax-collectors on behalf of the federal governments. And the cost of compliance is considerable.
Now, on with the show:
The new 13% Ontario HST (Horrific Sales Tax) generally adds 8% to the cost of the following items.
Dry cleaning
Cleaning services
Electricity and Heating
Internet Access
Electrician
Plumber
Carpenter
Landscaping
Snow Removal
Hotel rooms
Taxis
Camp sites
Domestic air/rail/boat/bus travel originating in Ontario
Magazines
Home Renovations
Private resale of car
Registration of said car
Gasoline
Diesel
New homes over 400K
Real Estate commissions
Massage Therapy
Vitamins
Ballet/Karate/Trampoline/Hockey/Soccer/etc. Lessons
Live Theatre fewer than 3200 seats
Hockey Rink rental
Hall Rental
Fitness Trainer
Barber
Hair Stylist
Esthetician
Funeral Services
Legal Fees
Ciggies, Other Tobacco Products, Nicotine Replacement Products
Hunting Licence
Fishing Licence
Upshot: I'm canceling my fishing, hunting, camping plans; canceling my ballet, karate, trampoline lessons, cutting out all pedicures and manicures, and, most importantly, I'M CANCELING MY FUNERAL!
You've heard of medical tourism? How about this: funereal tourism!
And that's the way the beleaguered Ball bounces.
17 comments:
And the clear benefits to businesses in Ontario? You know, those things that create actual jobs for people?
Yet more anti-HST ramblings without a drop of economic sense in them.
if you came looking for sense, Issa, you came to the wrong place.
Fun to practice your logical fallacy spotting, though.
If there's a business benefit, why stop at a 13% tax?
The immediate effect on my business is more work at compliance -- because I have to split 2010 into two periods Jan - June and July - December. And, no, I'm not going to "create a job" for the extra compliance work -- it just means I will spend more time working, without pay, for the government.
Another effect is the maintenance of seriously bloated salaries for Ontario government officials and unionized private sector workers -- both job-killers.
And mis-guided programs like the Ontario solar energy fiasco.
Ask the home Cleaners if its going to be good for their business -- it will increase the underground economy.
PJ - Knock it off. There was no argument being made -- so it's going to be hard to spot a fallacy.
I'm still waiting for you to tell us what Darwin's book with the word Evolution in it was.
And, let's not forget the Ontario public service workers who were transferred from PST to HST, from Ontario to federal employees. They were given by the Ontario government severance payments in the order of $50-$60 thousand dollars each -- for going from one safe, cushy, over-benefited government job to another.
How did that create jobs?
Let's take one example on the list. Selling a used car. You buy a car from me for $10,000. You hand over $10,000 to me. Then another $1,300 to the Ontario government. Plus you pay another 13% on the cost of having the car registered.
Tell me how this creates jobs. I would really like to hear it.
And, while we're at it -- let's discuss how the "harmonized" tax works in Quebec. Formerly, I would work in Quebec, and simply charge customers GST.
Now, with the harmonized tax, I have to charge customers a GST and a QST. This means I had to register in the province of Quebec -- a non-trivial task; I had to read through 100 pages of documentation to figure out my responsibilities, plus, every quarter now I have to file a report with the Quebec government on my business activities in Quebec.
In this instance, I am working, once again without pay, to act as a tax-collector for two levels of government -- Federal and Quebec.
"What do the two studies conclude about Ontario’s tax changes? Statistics Canada estimated a cost of $470 per year for the average household, or $316 if businesses pass ITCs through to consumers."
http://www.progressive-economics.ca/2010/06/11/duelling-hst-studies/
"If there's a business benefit, why stop at a 13% tax?"
Seriously? That's your first question? I'm not sure you understand any of the reasons why the switch to the HST is occurring.
To begin with though, I'm from BC, so if you want to tell me that the BC HST is just great, but Ontario did it all wrong, I guess I'd have a hard time arguing with that.
But back to your question:
Why stop at 13%? Because the benefit of the HST isn't being charged tax silly, it's ceasing to be double or triple charged tax on inputs tax has already been paid on and paying tax on the tax paid.
I work in the forest sector, but it works for any business that has inputs. Your company buys $1000 worth of materials from me, you make it into a product that you sell for $2,000. Under provincial sales taxes, you'd pay tax on $2,000. Under HST, you'll pay half that. You only pay tax on the value you added, ($1,000). I've already paid the tax on the $1,000 of material I sold you, so you don't have to pay tax on it again. You also don't have to pay tax amount I buried in the price to cover the cost of the tax I paid.
Old system: between the both of us, we pay tax on $3,000 plus some double dip tax on taxes.
HST: between the both of us, we pay tax on $2,000 ($1,000 less!) and there's no double dipping.
Of course it's true that not every business will benefit from this. Some were exempt from provincial sales tax before and won't be any longer. Those businesses were benefiting from a tax system that didn't treat businesses equally and instead let the government pick their favourite winner & loser sectors. You can argue for that if you like, but you'll have a hard time convincing me that a tax system should be set up so that politicians can stack the deck for some businesses and against others.
Issa: The benefits of introducing the GST over the old manufacturer's tax were incredible -- though the Liberals made political hay over it. And, I understand the rationale behind harmonization and agree with that too.
What I disagree with is the absolute level of taxation; the burden on businesses to function as non-paid tax collectors; and, a weaker point, I distrust the Ontario government's solemn declarations that the new tax will be "revenue neutral".
"Your company buys $1000 worth of materials from me, you make it into a product that you sell for $2,000. Under provincial sales taxes, you'd pay tax on $2,000"
This doesn't sound right. A company does not pay provincial sales taxes on its revenues.
"What I disagree with is the absolute level of taxation"
Then you shouldn't be arguing against the HST. You should be arguing to lower the rate. (Or the rate of another tax.) Arguing against the HST because you don't like the overall level of taxation is silly. Do you argue against incremental improvement because it's not perfect?
"This doesn't sound right. A company does not pay provincial sales taxes on its revenues."
I wasn't talking about revenues, I was talking about sales. If your company sells an item for $2,000 tax is paid on the full $2,000 regardless of any taxes paid along the way on that product. Although yes, to be technically accurate, your company doesn't pay the tax, your customers do and you remit it on their behalf, but that's really true of EVERY tax on a business. Property taxes, sales taxes, payroll taxes... ALL of them are passed on to customers as higher prices.
This really is true and it's why the HST is a good idea.
Old system: between the both of us, tax is paid on $3,000 plus some double dip tax on taxes.
HST: between the both of us, tax is paid on $2,000 ($1,000 less!) and there's no double dipping.
"Although yes, to be technically accurate, your company doesn't pay the tax, your customers do and you remit it on their behalf, but that's really true of EVERY tax on a business."
No, it isn't. Companies themselves pay PST and GST on goods and services. And I assumed at first you were referring to the taxes paid by the company, not the taxes collected by the company.
Thank you for taking the time to comment.
Ugh, I completely made a hash of what I meant to say.
What I meant to say was that taxes on companies are charged in various ways, but ultimately the money comes from the customers in the form of higher prices. Taxing corporations makes great political hay, but ultimately the money for the tax comes from the customers pocket.
Back to the HST though. You really shouldn't be against it. You should be for it. And perhaps also for reducing the rate and/or another tax rate. It makes no sense to oppose a sound economic improvement simply because it's not perfect.
In principle, I am absolutely for it.
Then why not lead with that along with why the HST is a good thing? Why help promote economic ignorance?
OK. I'll update the post. Is that a pleasure boat, or a commercial boat? ?Or is it a dock?
Oh my avatar! That took me a few seconds.
That's a boat I was on for a few days on a vacation a few years back. It's a pleasure boat converted from an old small sail transport ship. I keep meaning to change that to match my wordpress avatar.
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