HST Pushes Forward Despite Grumblings
Businesses, shoppers and tax officials are bracing for the effects of the new harmonized sales tax set to take effect in British Columbia and in Ontario on Thursday. But although the start date of the new system is the same, what goes up and what stays the same depends on which province you’re in, per an article by Keith Leslie in Monday’s Globe and Mail.
The sales tax, which is wildly unpopular amongst voters – 82% of British Columbians and 74% of Ontarians oppose the measure – combines the existing GST with the provincial retail sales taxes. The total tax will be 12 per cent in British Columbia and 13 per cent in Ontario.
Nevertheless, citing the competitive advantages of the tax and the improvements in efficiency and fairness (the PST are cascading taxes, or taxes that occur at every stage of value creation, in contrast to the HST which theoretically eliminates that distortion), the governments have pressed forward with the change. The harmonization has already occurred (in 1997) in Nova Scotia, Newfoundland, and in New Brunswick.
The article cites as the main targets energy costs for Ontario consumers – with an immediate increase in the cost of electricity, natural gas and home heating oil. Additionally, Ontario motorists will see their gasoline and diesel fuel costs rise because they will be newly subject to the 13% HST – an increase equal to the province’s 8% sales tax from which fuel had been exempt previously.
BC for its part is maintaining the exemption on its portion of the HST on gas and diesel, as well as on electricity and home heating fuel. But that benefit to consumers will be mitigated by a carbon tax on energy that will rise to nearly 5 cents a liter on July 1.
As far as housing goes:
“The HST will not apply to purchases of resale homes in either province, but will apply to new homes costing over $400,000 in Ontario and those over $525,000 in B.C. New home buyers in Ontario will receive rebates up to $24,000 to lessen the impact of the HST.”
Thus there are those pointing to the HST in the two populous as a beneficial dampening on a potentially overheating housing markets in the first and third most populous provinces – especially those in the cities of Vancouver and Toronto. It is important to discuss the implications of the looming HST with your experienced mortgage broker before purchasing a home, condo, or investment property.
