HST Sales Tax

[kettal]

It seems the people who are complaining the loudest about the HST are the ones who don't understand it. Let's look at one of the most upvoted comments on a Toronto Star article...

I can only afford winter heat by cutting back groceries now. Hydro will be even worse because we will soon have that idiotic smart meter dinging us for living during the daylight hours. With this tax grab on essentials to life, we will have to move out of our small semi to an apartment. I just hope we can do so before July. Even then, our rent will be taxed, another necessity of life. If they took the HST off of necessities of life and reduced it to 105 it would be an easier sell. As it stands now, all major purchases after July will be done it the US. Where we live, it still falls under the 100 mile shopping guide.

So people are going to drive to the US to buy... Heating oil?

And he is paying taxes on his rent??

Here's another which is highly ranked:

I wish I could get a job to write a report based on nonsense. Plain fact is that everything that did not cost the end consumer, that's you and me, eight percent before, will cost at least eight percent more. You cannot change that fact. Additionally, it will most likely be more than eight percent more because we all know that businesses are also going to be charged the extra eight percent on services, products, etc... and they will pass that along in the price as well. Try this math: Food item costs 5.00 to manufacture/produce. It's sold to a wholesaler, with 10 percent profit, at 5.50 HST = 6.33. Wholesaler marks up 10 percent and sells to retailer 6.96 HST = 8.00. Retailer marks up 10 percent and sells to public for 8.80 HST = 10.12. So that 5.00 has 3.19 worth of taxes applied to to it which works out to be 63.8 percent taxes and it all falls on the consumer because the companies are passing it along. Before HST, the item would have cost 7.70 with a tax percentage of 54 percent.

find six things wrong!

 

[afransen]

Best argument against democracy and all that...

 

[Red Mosquito]

I think the real answer is to stop reading those comments in the star. Is it the same 5 grumpy old men posting those things, or 5 Albertans who need to hate on this city at all costs?

 

[pilinha]

The only gripe I had with the new HST was the unfair burden it put on new home buyers. They've addressed that issue for the most part, so it should be a positive thing for everyone going forward.

 

[matix]

i still haven't finalized an opinion on this yet..

but what really gets me is.. how on earth is this going to create 600,000 jobs in ontario.

first time i saw that was on the CP24 news ticker.. and thought it had to be a typo.

 

[UrbanVigor]

Very good question. We keep hearing how this is good for business. How good has business been in the Maritimes as a result of the HST? And if it is good for business that these taxes are passed onto the consumer then really how good is it for everyone? Sounds to me like there's a lot of spin. At the end of the day, it's more revenue for the government at the expense of the quality of life for the people.

 

[afransen]

It will create jobs by lowering the effective tax rate on new investment. So, when a company buys equipment, builds a warehouse, etc. there is a lower cost of doing so. Lower cost means more projects have a good enough rate of return to justify investment, and more investment means more and better jobs.

Also, from wikipedia:

"The implementation in eastern provinces demonstrated that consumer prices fall after the change to a harmonized sales tax.[2] The Martin task force found that “in Atlantic Canada prices on goods fell when they harmonized the sales tax.” [13]"

 

[PinkLucy]

And he is paying taxes on his rent??

GST is applicable on commercial rent, not sure about rents for individuals.

 

[matix]

It will create jobs by lowering the effective tax rate on new investment. So, when a company buys equipment, builds a warehouse, etc. there is a lower cost of doing so. Lower cost means more projects have a good enough rate of return to justify investment, and more investment means more and better jobs.

i don't buy that. most aspects of any type of soft cost.. services is only subject to gst... so development projects, will cost more..

how bout the lawyer bills at the omb.. going from just subject to gst to the hst. multiple that by all aspects.. architect, p.eng's, env'tal consultants suddenly going from just gst to to the hst.

i think the 600,000 can only possible be the number of bean counters they'll need down at queens park.

 

[PinkLucy]

I don't buy the job creation promise either. I also don't buy the reduced cost of consumer goods. It's just a cash grab at a really bad time; the government wants us to spend, spend, spend to stimulate the economy yet they slap on a tax that will keep our wallets in our pockets. Brilliant move, McWimpy et al.

 

[afransen]

i don't buy that. most aspects of any type of soft cost.. services is only subject to gst... so development projects, will cost more..

how bout the lawyer bills at the omb.. going from just subject to gst to the hst. multiple that by all aspects.. architect, p.eng's, env'tal consultants suddenly going from just gst to to the hst.

i think the 600,000 can only possible be the number of bean counters they'll need down at queens park.

If you're skeptical, take a look at the report: Jack Mintz, School of Public Policy

Keep in mind the 600,000 figure includes decreases in capital taxes and corporate income taxes. All these together will cut the marginal rate for new investment in half in Ontario. If you don't think business taxes deter investment and thus economic activity and jobs, perhaps we should tax all corporate profits?

 

[afransen]

I don't buy the job creation promise either. I also don't buy the reduced cost of consumer goods. It's just a cash grab at a really bad time; the government wants us to spend, spend, spend to stimulate the economy yet they slap on a tax that will keep our wallets in our pockets. Brilliant move, McWimpy et al.

Frankly you're wrong. The package of tax changes introduced will result in a slight net decrease in government revenues (when you factor in personal and corporate income tax cuts). Just because you have an opinion doesn't mean it is valid, reasonable, supported by facts or worth anyone listening to. Arguing from a position of ignorance just wastes everyone's time.

 

[gristle]

That's correct. From what I recall, revenues will drop somewhere in the neighbourhood of a billion dollars. However, there is a reduced cost associated with collecting the tax, and small business people will spend less on remitting it.

If you are a condo owner you will see your fees go up slightly because of the HST, but that is due to the collection of services that you typically pay for that are now subject to the HST.

 

[PinkLucy]

Frankly you're wrong. The package of tax changes introduced will result in a slight net decrease in government revenues (when you factor in personal and corporate income tax cuts). Just because you have an opinion doesn't mean it is valid, reasonable, supported by facts or worth anyone listening to. Arguing from a position of ignorance just wastes everyone's time.

I am not ignorant. I have been a business owner for over 25 years and a taxpayer for longer than that. Economists spew theories left, right and centre. Sometimes their theories pan out, sometimes not.

As a small business owner, all of the economic theories and government promises telling me that I would be able to hire more staff have never come to fruition because any associated savings, if they occur at all, are so minimal that they didn't put enough dollars in my pocket to hire additional staff.

So don't tell me I'm ignorant. I've walked many miles in the shoes of a successful business owner. If more people got down from their ivory towers and got their hands dirty, perhaps they would grasp a sense of reality.

 

[afransen]

If you were a successful business owner, perhaps you'd be able to grow. Nevertheless, your anecdotal evidence isn't worth much. Things that don't appear to work on a micro level for every business often work at the macro level. Dozens of countries use value added taxes such as GST/HST. That is a fact. Prices fell and after tax return on investment rose in the Atlantic provinces after they adopted the HST. That is a fact. The net effect on government revenues of the array of tax changes this year is a wash, if not slightly negative. That is also a fact. It is not a tax grab, it is not bad policy, it will not dramatically increase taxes or harm the economy. It will be good for the economy of the province in the long run.

As far as economists being sometimes right and sometimes wrong, the same could be said for doctors. Does that mean you won't listen their advice?