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Since the early 1990’s when Canada’s Goods and Services Tax (GST) was introduced by the federal government, Canadians have been used to paying two types of taxes on nearly all of their purchases. Combined with the Provincial Sales Tax (PST), these two taxes have drawn the ire of citizens from all over the country who feel as if they are being taxed to death.
The recently devised Harmonized Sales Tax (HST) combines the two taxes making tax collection less of a burden on merchants. Perhaps, the Canadian government is trying to persuade the nation that this will be more convenient for taxpayers as well. Notice the use of the prefix “harmony” in the name of this combined tax? There is the obvious connotation of this being a good thing. So is it?
HST has been the norm is three Atlantic provinces since 1997. Citizens of New Brunswick, Newfoundland and Labrador and Nova Scotia all pay a 13% HST on purchases which combines the 8% PST with the 5% GST. Originally, when HST was introduced in these provinces, it stood at 15% to incorporate the previous rate of 7% for GST.
This fact, may potentially quell the fears of Ontario and British Columbia residents who, today, received the news that HST will take effect in their provinces on July 1, 2010. Some believe that the combined HST may unfairly cost Canadians greater amounts on certain purchases that would not generally charge one of the two taxes.
An article posted on the website of The Toronto Star today reports that “consumer groups in both provinces have railed against the change, since it will expand the range of goods and services subject to provincial sales tax.”
According to Wikipedia.org, certain purchases namely newspapers and fast food items totaling up to $4 will have the PST portion of this tax exempted.
Liberal Party leader Michael Ignatieff was quoted today in The Toronto Star as saying that he believes that the HST will bring greater prosperity to the economies of both Ontario and British Columbia.
Says Ignatieff: “The Liberals are certainly speaking with one voice on the HST…We made a tough decision because we believe that provinces, both British Columbia and Ontario, want this legislation. They believe that it will create jobs and employment in those two provinces.”
The Star also notes that Quebec has also already adopted the HST. No word yet on how it has affected the economy in that province.
Nevertheless, on Canada Day next year, both Ontario and B.C. residents will be celebrating by introducing a brand new tax. Time will tell if the Harmonized Sales Tax brings any harmony to either province.