Introduced in last spring's provincial budget, a proposed Harmonized Sales Tax will take effect in Ontario by July 1, 2010. A harmonized sales tax means that instead of having a federal sales tax (Goods and Services Tax) and a separate provincial retail sales tax, both taxes will be put together and streamlined as one. In theory, this does not seem to be much of an issue. Having one administration responsible for the registration, receipt and collection of sales taxes instead of two seems to be a money saving proposition for government, as well as ease some of the bookkeeping for small businesses.
However, at the present time people in Ontario pay a 5% Goods and Services Tax on most consumer goods and services, plus an additional 8% sales tax for some goods. Under a harmonized tax schedule, the provincial 8% retail sales tax will now apply to all goods and services presently covered by the Goods and Services Tax. In particular, where most services in the past were not taxable under the retail sales tax, most of them will be under this proposal. Expenses that will be affected include home heating, gas, hydro costs, condominium fees, home renovation contracts, hair cuts, taxi fares, commercial rents, professional services (e.g. legal, accounting), as well as many other services. The effect of this tax is that affected services will become 8% more expensive to purchase.
Opposition to this proposal has been growing throughout Ontario, as well as in British Columbia, the other province where this proposal is also being made. There are dozens of Facebook groups, websites, petitions, as well as rallies of taxpayers across both provinces that are concerned about what they see as another "tax grab". Opposition to this proposed tax has increased to 75% in Ontario, based on a recent Angus Reid poll.. Among those opposed, 57% identify themselves as "strongly opposed". Only fifteen percent of the 1,162 Ontario residents polled support the proposed tax.
In the meantime, the provincial government is attempting to sell this tax to the voters by declaring that not only will this mean a harmonization of the two taxes, but the "total tax reform package" will create 591,000 new jobs in recession-ravaged Ontario, as well as reduce personal income taxes for 93% of Ontarians (including taking many more off the tax rolls altogether). A new sales tax credit will be issued to Ontario families with incomes under $25,000 per year, as well as for the first year, most families will be entitled to $1,000 in three separate payments to help people through the first phase-in year of this tax. Individuals will be entitled to $300 each.
Both the opposition Progressive Conservative and NDP Parties are against this tax and have vigorously used Question Period, Petitions and various motions in the Legislature in an attempt to scuttle the tax and/or bring the matter to extensive public hearings. The concern felt by Opposition MPPs is that the Liberals did not campaign on this tax; in fact, they campaigned on the opposite stating that if they came to power in 2003, they would not lower taxes, nor would they increase them either. MPPs from all sides of the house are hearing from constituents who are worried about how this tax might increase the cost of living and reduce the purchasing power for those on fixed incomes.
The Liberal Government instead proposed one and a half days of public hearings in exchange for a time allocation motion, which will limit debate and force Bill 218, the bill that will create this tax, to pass before Christmas. The majority Liberals are hoping that the $1,000 payments which are expected to begin in spring and end the following summer of 2011, will make this tax more bearable and make voters forget about their concerns. They are also hoping that many will appreciate newly won tax cuts that are to take effect January 1, 2010. Critics also believe the Liberals forced the issue now, so this issue may not linger as much to the forefront when Ontarians go to the polls in the fall of 2011.
Angela Browne - Angela Browne is an independent Paralegal practising in the Niagara Region, of the Province of Ontario (Canada). She is a published ...
