The truth about HST

The 2009 Ontario Budget announcement included an initiative to eliminate the Provincial Sales Tax (PST) with a value-added tax and combine it with the Goods and Services Tax (GST) to create the new Harmonized Sales Tax (HST). Since that time opponents of the new tax have spread misinformation about the new HST and the media has been more or less complicit.

Here are the truths about the HST.

• The provincial portion of the HST will be 8% and the federal portion will be 5%, for a combined HST rate of 135.
• Most of the products we buy will see no new tax - 83% of purchases fall under this category. There are a lot of products and services on which we already pay the PST and GST. While some items will continue to be non-taxed (prescription drugs).
  
• Right now the PST is charged on many purchases made by businesses in manufacturing goods and providing services. It penalizes business by taxing them at every step in the production, distribution and retail processes – making it a tax on a tax on a tax. Roughly $4.5 billion in embedded sales tax is hidden in this way.
• The HST will generally remove this hidden tax by refunding sales taxes paid on most business inputs. These refunds will mean lower prices for many consumer purchases and lower business costs. Opponents are saying prices will not fall. Except 140 countries have already introduced this type of tax and for the very same reasons prices fell elsewhere.
• It is being reported that consumers will pay more in taxes each year because of HST. It is true that they will pay more in sales tax but there are offsetting cuts in income taxes so for many people it will be a wash. Opponents aren't telling you that.
• So why would the government reduce taxes to businesses while not increasing personal taxes while carrying a huge deficit? Well since 60% of goods produced in Ontario are exported, Ontario companies will be able to lower prices and sell more goods. It is estimated that 600,000 new jobs will be created in Ontario by making Ontario companiew more competitive. More jobs mean more tax revenue for the province. So Ontario expects to be ahead over time.