Thursday, July 01, 2010
HST Arrives; Sky Fails to Fall
The Harmonized Sales Tax has arrived in both British Columbia and Ontario. Life, surprisingly enough, kept going. The HST has been called a lot of things by a lot of people. What it is in essence is yet another tax shift away from business taxes and on to personal and consumption taxes. That's really all the HST does. That's why it is good for business and that's why people are upset about paying 8 cents more on the dollar for a liter of gas in Toronto. The HST allows businesses to account for provincial sales taxes in the same way they account for the Goods and Services Tax. GST, and now HST paid by businesses in order to produce or acquire a given product are considered to be an input tax credit. That credit can then be claimed when the business sells that product to the final consumer and charges HST. In essence, the government only receives the HST from the final consumer. All the transactions made to get it to the final consumer should be tax neutral. That's why businesses like it. It also means they pay one tax instead of two which means less paperwork and aggravation in the long run. Final consumers will only notice a difference on goods that were previously exempt from provincial sales taxes and have not been granted an exemption on the HST. Governments have tried to lessen the burden on consumers by lowering income taxes. That's it. Much ado about nothing if you ask me. Once the sticker shock wears off, we'll forget it wasn't always that way. At 5-13%, Canada still boasts a relatively low Value Added Tax when compared to many countries in Europe.
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4 comments:
After the GST, the federal election was Chretien's to win or lose. As a result of the HST, the next provincial election is Hudak's to win or lose.
If the HST was so revenue neutral, I don't think McGuinty would be sending out cheques when we are running the largest deficit in Ontario's history.
Lets see if your singing the same song in 6 months. I'm in the small construction industry in Ontario, which, pretty much flat lined about a month ago when the good people of Ontario realised that on a 20,000.00$ renovation (which is not that big of a job) Mr McGuinty is now demanding an extra 1600.00$ in tax for god knows what. So, here's whats happening from someone who is seeing it first hand and is very worried. People are asking me to cut out both taxes and work for cash, so instead of work costing them 22,600 they are asking me to do the work for cash for 19,000$. I can only say no so many times. I threw up my hands yesterday in a meeting with 2 clients who, on average if they had of done renovation work last year would have saved 7,040.00$ in taxes, and, have decided to wait. Just friggen brilliant McGuinty!!! Now, dont go whining and bitching like a little girl when Ontario HAS to vote in another Mike Harris to clean up this mess because, it is going to get messy.
billg
"What it is in essence is yet another tax shift away from business taxes and on to personal and consumption taxes."
Ya, sounds fantastic when you put it that way. Sort of like lowering corporate taxes and raising personal income taxes. Woohoo!
I guess none of you guys will be voting for Stephen Harper's Conservatives in the next election. Anonymous, if you charge your clients the full HST, your profit margins just skyrocketed. Being able to recover the PST on parts and materials should allow construction firms to mitigate much of the impact of the HST on their quotes. The businesses most hurt by the HST are firms with very few input costs like lawyers and consultants.
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