Discontent over Harmonized Tax

In its 2009 budget, the McGuinty Government revealed its plan to adopt a Harmonized Sales Tax (HST), the lynchpin of its proposal for “comprehensive tax reform”. Yet in spite of the budget’s receiving royal assent on June 5, many residents of Prescott-Russell and people across the province are voicing their frustration over the new tax and hope that something might be done before it comes into effect on July 1, 2010.

“It’s outrageous,” declared Scott Baillie, manager of the Canadian Tire Gas Bar in Rockland. “We’ll be collecting at least $2,400 dollars more everyday from the extra 8% on gas; maybe that’ll help pay for McGuinty’s consulting or work for his buddies,” he mused.

Letters, commentary, petitions and more have sprung up in droves online since HST in Ontario was first announced. The McGuinty Government with its 71 seat majority, however, passed the budget handily, committing Ontario to implementing the HST by July 1, 2010.

The Harmonized Sales Tax is a single tax of 13% that combines the Federal GST with the Provincial Sales Tax, the former at a rate of 5%, the latter at a rate of 8%. The point of contention, however, is that the HST applies to all products and services to which the GST applies, effectively raising the tax on many items that now incur no PST.

“I certainly don’t think they should be applying more tax to a haircut; it’s just ridiculous,” explained Diane Maloney, ex-owner of and employee at the Embrun Barber Shop. “This is just another money grabber, a rip off.”

For certain items – including among others books, children’s clothing and feminine hygiene products – the buyer would receive a point of sale rebate of the provincial portion of the HST, rendering the effective tax rate for such items the same as the current 5% GST. Some of the items that would see an 8% jump in total cost, however, include electricity, accounting and legal services, personal services, such as haircuts, and real-estate commissions.

“It will affect everything from legal fees, moving costs, appraisals, real estate commissions, home inspection fees and other related services,” said Angela Hennessey, a realtor from the Embrun-Russell area. “As a Realtor I am not pleased about this new tax; it will severely affect the resale of housing and reduce affordability for Ontarians trying to buy a home.”

The McGuinty Government calls the HST a “value-added tax”, because the single tax would be administered entirely by the Federal Government, thus creating administrative savings for the Province. However, the McGuinty Government has earmarked a total of $400 million in transition assistance for small businesses and one time credits of up to $1,000 for families and individuals.

Glengarry-Prescott-Russell MPP, Jean-Marc Lalonde, who was also a Vice-Chair of the Standing Committee on Finance and Economic Affairs which examined the budget, has supported it from the outset. When the budget was released in March, Lalonde maintained: “With our comprehensive tax reform, we’re making Ontario stronger and more competitive, and that will help our families and businesses prosper again.”

Don McPherson, a resident of Casselman and father of 11, disagrees: “Why is it costing me money for them to save money?” he asked. “There’s a reason we have separate levels of government: to fight each other so that our interests are protected. ‘Harmony’ and ‘tax’ just don’t go together. That’s an oxymoron.”

Published in the July 16, 2009 issue of the Musketeers' Journal.

© 2010 - William G. Stephenson