Five reasons to love the HST

Steve Brearton

Thursday, Jun. 24, 2010

It won’t be easy. In July, when Ontario and British Columbia join the Maritime provinces in blending provincial sales taxes into a single federal levy on goods and services, the price consumers pay for everything from hotel rooms to funerals is going to go up. Just over one in 10 Ontarians and British Columbians support the harmonized sales tax—13% in Ontario and 12% in B.C. But will the outcome be that dire?

Businesses love it
The Ontario Ministry of Finance calculates that levies, like those on the raw materials in a suit or on the maintenance of a long-haul rig, together add $4.5 billion annually to the price of goods. The HST won’t eliminate these costs, but it will allow businesses to claim them as tax credits.

More is less
Even though consumers should plan to pay more for most goods and services (movie tickets and admissions to pro sports events are rare exceptions), new tax reforms—including personal income tax cuts, instant rebates and tax credits—are designed to balance the additional costs in both provinces.

Jack Mintz likes it
The University of Calgary economist claims the HST will boost investment in B.C. by $11.5 billion and add 113,000 new jobs over the next decade. In Ontario, the Palmer Chair in Public Policy suggested the HST would lead to $47 billion in new investments, increase wages and add almost 600,000 jobs over the same span.

It’s good for somebody…
By shifting taxes to the end consumer and decreasing the number of tax-exempt products at the register, businesses will lower their expenses. The B.C. government claims companies will save $150 million in administrative costs each year.

And it’ll only hurt a little
In May, Statistics Canada reported that the HST would cost the average Ontario family $792 annually—at least initially. However, a 2007 study on the impacts of the HST in Atlantic Canada found that the new tax did not lead to increased consumer prices.

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