Canadians :HST , Whats in it for the Govt

[Declan]

I could have sworn there was a HST thread somewhere, but the search function shows no such beast.

Anyhoo, Harmonized sorta probably means that the Fed 7 percent and the Ontario 8 percent will get merged and the Ontario web site gushes on how it will be good for all of us.

Finally someone thought of the children.

But really , um, whats in it for the two entities known as the govt

Declan

[Northern_Piper]

Previous thread on topic: What is Harmonized Sales Tax?

Here’s what I said in that thread:

@Northern_Piper

There wouldn’t be much policy reason for the feds to collect a provincial sales tax, without it being a VAT, just like the GST. They’re not interested just in harmonizing the tax base, but also the structure of the tax.

The idea of the HST is not just that the taxable items are the same, but that the sales taxes as currently structured distort the market and build taxes into the cost of goods. It’s argued that a VAT does not do this, that it doesn’t distort market prices as much and keeps the prices of goods more competitive. That was one of the arguments for the GST in the first place - it replaced a hidden federal manufacturing excise tax with a VAT tax. So the feds favour VAT taxes as a general economic policy, and are encouraging harmonization to achieve that policy.

I don’t know enough about the economics of taxation to say if the idea is sound, but that was the rationale. So I can’t see the feds being interested in the provinces just harmonizing the tax base; harmonization also includes the VAT concept.

Provincial sales taxes now do operate much like the old hidden federal manufacturing tax, since manufacturers pay the provincial tax on materials they buy to incorporate into their product. They naturally build the cost of the tax into the price of the product that the consumer pays, and then the consumer pays tax on that hidden tax. So not only does it drive the price up, there’s double-taxation. At least, that’s the argument. Again, I don’t know enough about the economics of taxation to say whether it’s so serious a problem as to justify switching to an HST.

[elbows]

Like so many things in life, the answer is money!

HST will now be payable on every home sold in Canada. Think about that for a moment. Remembering that houses often cost in excess of $100,000 it’s a lot of money for the government.

Why aren’t Canadians demanding change? They got it pretty good, don’t want to make a fuss, and the alternative parties are just as bad as this one, it never produces any change.

[Cat_Whisperer]

Wait, what? They’re going to do HST all over Canada? What about provinces that don’t have a provincial sales tax, like Alberta?

[Grey]

It’s not universal. It can’t be since it requires a harmonization with a province. Heck, Alberta already has HST, since HST = GTS + Prov. Sales Tax.

[storyguide3]

@elbows

HST will now be payable on every home sold in Canada. Think about that for a moment. Remembering that houses often cost in excess of $100,000 it’s a lot of money for the government.

As others have said, not all provinces have or will have HST, at least in the near future. Also, I believe that HST only applies to the sale of new homes, not the sale of existing homes.

[Declan]

@Northern_Piper

The idea of the HST is not just that the taxable items are the same, but that the sales taxes as currently structured distort the market and build taxes into the cost of goods. It’s argued that a VAT does not do this, that it doesn’t distort market prices as much and keeps the prices of goods more competitive. That was one of the arguments for the GST in the first place - it replaced a hidden federal manufacturing excise tax with a VAT tax. So the feds favour VAT taxes as a general economic policy, and are encouraging harmonization to achieve that policy

So the Tor Sun says stuff is going to go up in price , while somethings should either remain as is, price wise, or even go down. Since so many more things are going to be coming under the tax umbrella that were not covered previously, would’nt it have been better to drop the provincial tax down to 5 percent with the GST merger.

Ontario is going to be running deficits for a few years , but eventually Im not sure I would be comfortable with that kind of money coming in to Govt coffers, when the economy starts picking up again.

Declan

[Declan]

@elbows

Like so many things in life, the answer is money!

HST will now be payable on every home sold in Canada. Think about that for a moment. Remembering that houses often cost in excess of $100,000 it’s a lot of money for the government.

I knew it was going to be more money, no govt screws with the tax system unless it returns more money than the old way of doing things, or simplifies existing taxes,so that people who avoid paying taxes will start remitting.

As for the HST being payable on new housing, was this not true of the GST? or was there an exemption.

Declan