Ontario Harmonized Tax

[zipperhead_cop]

Apologies if this is elsewhere.  If you use the word "tax" in the search engine, you get quite the plethora of results 

I am absolutely the first person to admit that I have little or no training/experience in things economic.  I will also be the first to be skeptical of anything I see show up in my email inbox that appears to be a "public service announcement".  However, this email gave me pause due to its potential scope and I have not hear anything about it thus far:

Subject: Ontario 's New 13% Harmonized Sales Tax - What It Will Mean To You



Hello. Next summer (2010) the Ontario Government is set to put into force its new harmonized GST/PST sales tax which will apply a 13% sales tax to everything we purchase.

Things That Were Not Subject To The Current 8% PST Will Be Now Taxed As a result, things that were not previously taxed under the current Ontario Provincial Sales Tax (PST) will be taxed at 8%.

The new 13% tax will therefore apply to things like your electric bill, your gas bill, your water bill, condominium fees, insurance premiums, and every other good and service you purchase. There are almost no exemptions. The current Ontario PST tax does not apply to services, nor does it apply to the purchase of certain goods. The new 13% tax will therefore extend the old 8% PST tax rate to the purchase of all goods and all services.

The New 13% Tax Will Apply To The Puchase of All New Homes. The new harmonized GST/PST will also apply to all purchases of all new homes. If a person were to purchase a new $1 million dollar home in Toronto , they would have to pay roughly $200,000 in taxes as a result of the Ontario land transfer tax, the new city of toronto land transfer tax, and the new harmonized 13% GST/PST.

Think about that and what that would do to real estate values in Toronto ...
It will cause property values to fall and kill the new home construction industry and the jobs it creates.
And it won't be long before you'll hear our elected representatives telling us that because of the harm that has been inflicted to the new home construction industry by the new 13% tax, it would be "fair" to extend the new 13% tax to sales of existing homes.

The New 13% Tax Is An Assault On Your Primary Residence Canadians have had two things that they have always been able to count on as being tax free - things that they could use to save money and accumulate wealth. They are your: (a) primary home; and(b) RRSP. That's it.

The extension of the new 13% GST/PST to homes is simply a tax assault by the  government on your primary home. They want to tax your primary home and you will suffer because of it.

Why? Because if a purchaser has to pay almost $200,000 in taxes to buy your $1 million dollar home, the purchaser is going to pay less to you for your home. The purchaser will reduce the amount he or she is willing to pay to you in order to pay all the taxes.

The New 13% Tax Will Effectively Raise Your Income Taxes Currently, the combined Federal/Ontario income tax rates are roughly 25% on the first $20,000 of taxable income, 42% on the next $40,000 of taxable income, and 46.5% on each dollar of taxable income over $60,000. On top of that you have to add the "Fair Share Health Tax" of up to $1,000 each of us has to pay.

If the Ontario Government gets away with implementing their new harmonized GST/PST sales tax of 13%, the top effective income tax rates in Ontario will be as follows (since you can't spend any of your tax paid dollars without paying the new harmonized 13% GST/PST tax):

> 38% on the first $20,000
> 53% on the next $40,000
> 59.5% on every dollar over $60,000

On top of that, you have to pay your Ontario Fair Share Health Tax, your city realty taxes, your city garbage fees, your city water fees, your city street parking permit fees, your annual Ontario and new city of toronto vehicle license plate fees, your Ontario land transfer tax, your new city of toronto land transfer tax, your gasoline taxes, your liquor taxes, your air departure taxes, your entertainment taxes, and so on.

OF ALL THE MONEY YOU WORKED HARD TO EARN, WHAT PERCENTAGE ARE YOU REALLY
KEEPING FOR YOUR OWN USE? 25%? 20%? 10%?

ENOUGH IS ENOUGH - FIGHT BACK
THIS HAS GOT TO STOP HERE OR WE WILL ALL SOON BE WORKING FULL TIME FOR THE
VARIOUS LEVELS OF GOVERNMENT IN ONTARIO .

YOU CAN ALREADY SEE HOW ARE LIFESTYLES ARE DECLINING BECAUSE OF THE
ENORMOUS TAX LOAD WE BEAR. AS A RESULT, I URGE YOU TO TAKE THIS ISSUE SERIOUSLY AND TO FILL AND AND SIGN THE PETITION AT  www.[LINK DELETED UNTIL MORE INFO KNOWN].com AGAINST THE NEW HARMONIZED GST/PST TAX SET OUT BELOW.

I WOULD ALSO ASK YOU TO SEND THIS E-MAIL ON TO OTHERS THAT YOU KNOW AND
ASK THEM TO DO THE SAME. IF WE DON'T WORK TOGETHER ON THIS ISSUE THE NEW HARMONIZED 13% SALES TAX WILL BECOME A REALITY NEXT SUMMER


Rather Toronto-centric I thought.  Where else would you throw around million dollar home transactions like they were the norm? 
So has anyone heard about this?  Is it just internet hype and no big deal?  God knows we have ZERO reason to trust Dolton and his gang of bandits, but this one seems even a touch far reaching. 

 

[Occam]

It's no joke, and no good can come of it.

http://www.cbc.ca/money/story/2009/03/27/f-tax-faq.html

 

[Monsoon]

The key here is that the HST will be charged on all "new" homes - this has always been the case with the GST, as well as the QST in Quebec and the HST in the Maritimes. Note also that the PST will no longer be charged on the materials and services that go into building a new home, which will substantially reduce the construction cost.

In fact, that's the real story of the HST. Because manufacturing inputs will no longer be taxed, Ontario exports will become substantially more competitive. And while no new tax is a good tax, at least it isn't a "progressive" tax.

 

[eurowing]

BC is doing the same damn thing.

 

[Edward Campbell]

I know I'm repeating myself, but:

Consumption taxes (HST. GST, PST, etc) are "good" taxes because they are discretionary - you get to determine, to some degree, how much you give to the government. They can be rebated, in whole or in part, through the tax system, to those who are at lower income levels; and

Income taxes are "bad" taxes because they tax savings which are used for investments that create jobs - income taxes are, therefore, a tax on jobs.

 

[DBA]

It's kinda sad to see a long call to action article that must have taken a lot more time to write than the 30 seconds it took me to google and find out if the tax even applied to resale homes. It doesn't. The GST isn't charged on resale homes and the HST won't be either. From an article on the Revenue Ontario website:

Buyers of new homes would receive a rebate of up to $24,000 regardless of the price of the new home.

    * Buyers of new residential rental properties would receive a similar rebate
    * The HST would not apply to purchases of resale homes.

 

[Dennis Ruhl]

I don't believe it applies to water bills or insurance premiums.  One benefit is that vehicles sold by non-registrants won't be taxed every time they are registered.  I wish the GST/HST had avoided real estate totally because the numbers are big as is the potential for screw ups.  The credit on a house purchase is something like 42% of the tax leaving 58 % which wouldn't be all that different than the tax paid on the materials.  The big risk on real estate is that non-registrants must collect and remit the tax from a sale if the property has been used for commercial (non-residential, non-personal enjoyment) purposes and it is being sold to a non-registrant.  There is also endless headache potential from split use property such as a significant business use of residential property (farm, sawmill, etc.).

 

[Dennis Ruhl]

I know I'm repeating myself, but:

Consumption taxes (HST. GST, PST, etc) are "good" taxes because they are discretionary - you get to determine, to some degree, how much you give to the government. They can be rebated, in whole or in part, through the tax system, to those who are at lower income levels; and

Income taxes are "bad" taxes because they tax savings which are used for investments that create jobs - income taxes are, therefore, a tax on jobs.

Governments like consumption taxes because they are more reliable than income taxes.  My guess is that Alberta will generate little corporate income taxes this year because so many companies have losses that are carried back to recover taxes paid in the good years.

The fact is that the average working stiff, in his mind anyway, has little discretionary income.  A tax is a tax is a tax.

 

[Occam]

One benefit is that vehicles sold by non-registrants won't be taxed every time they are registered. 

Can you clarify that a little?

If I'm reading that right, Ontario won't be taking the same road as the Maritimes, where they charge HST on the Canadian Red Book value of the vehicle every time the vehicle changes ownership (except specific transactions such as those within a family, for example).

 

[Dennis Ruhl]

Can you clarify that a little?

If I'm reading that right, Ontario won't be taking the same road as the Maritimes, where they charge HST on the Canadian Red Book value of the vehicle every time the vehicle changes ownership (except specific transactions such as those within a family, for example).

They charge a separate tax on vehicle transfers where HST isn't charged.  It really isn't HST.

http://www.gov.ns.ca/snsmr/rmv/registration/vetrans.asp

I don't know what Ontario will do.  I assumed the broader base of the HST compared to PST would have allowed them to drop such taxes.  Was I ever wrong.  I am familiar with HST as it is calculated on the same base as GST but don't know provincial quirks.  Where I live there is no PST or HST. 

 

[Edward Campbell]

Governments like consumption taxes because they are more reliable than income taxes.  My guess is that Alberta will generate little corporate income taxes this year because so many companies have losses that are carried back to recover taxes paid in the good years.

The fact is that the average working stiff, in his mind anyway, has little discretionary income.  A tax is a tax is a tax.

'Governments' are great amorphous masses and while I'm sure there are people in governments who embrace consumption taxes because they are, indeed, more 'reliable,' the economic case for them rests on the fact that they do less harm to productivity.

I understand the view of the 'average working stiff;' I am the 'average senior citizen/pensioner;' I, too, pinch pennies and begrudge the government's ever increasing grasp; but I support consumption taxes as 'better' than income taxes. One tax is not just like another; some are qualitatively 'better' for the country. The HST, dollar for dollar, is 'better' than an income tax that would raise the same amount.

 

[Gideon]

  With the HST about to take effect (July 1), some will be wondering how it will affect their finances. Here is a page
that shows what will and will not change with the implamentation of HST.

http://www.rev.gov.on.ca/en/taxchange/taxable.html

  From what I understand ( and i don't really ), the HST will  apply to more services then the PST or RST.

 

[SeanNewman]

I just about a used $4,000 motorcycle in NB and had to pay the full 13% tax on it to Service NB, which is balls.

This item has already had tax paid on it multiple times.

The sad part is that all these taxes just become a general slush fund.  The GST was supposed to go entirely against the debt when it came out 20 years ago, but it just became government income the same way a soldier used to use the $17/mo clothing allowance as part of their pay.

And even with all these taxes the government runs deficits most of the time.  It takes the country running on all cylinders economy-wise to get into a surplus, and then that surplus is multiplied ten-fold by the next deficit when the economy goes bad.

 

[captloadie]

Although I'd rather not pay more taxes at all, I'd rather pay an HST than greater income taxes. A 5% increase on goods and services can be mitigated by purchasing less, if it comes to that. A 5% increase to your income taxes is a lot harder to make work. Consumptions taxes, as stated previously, are a great way to have the rich"er" contribute more to public coffers.

 

[zipperhead_cop]

How about we just cut spending on crap we don't need, like welfare and health care abusers? 

 

[George Wallace]

Well.  The first weekend of the HST has been in effect in Ontario.  Has anyone else noticed that we ARE paying more?  We have noticed that things that were covered by both the PST and GST and now covered by the HST are NOT being taxed the same.  We noticed it on a small item that we buy quite regularly, and now with the HST is taxed one cent more.  We are trying to figure out why the same percentage of taxes, is now one percent more in the actual tax.  Could it be that before, with the two taxes (PST and GST) things were rounded down, and now with the HST things are rounded up?

Just wondering if anyone else has noticed this "little" change?


One cent collected from several millions does eventually add up.

 

[George Wallace]

OH!

Has anyone in Ontario seen that cheque that Dalton McGuinty promised us.......other than a letter saying that you are getting one?





I know.....It is only one more promise.




I know.....The cheque is in the mail and...........

 

[Old Sweat]

Ours arrived on 30 June and went right into the bank. If the issue is done alphabterically, George, you can use yours to buy a costume for Halloween.

 

[GAP]

There was quite a bit of controversy over the GST on gasoline being calculated AFTER the PST was calculated, thus was higher. The argument was that both should have been calculated on the original amount, then added on to the total. I wonder if that is part of the problem with higher prices under the HST....no clue otherwise....

 

[SeanNewman]

George,

Hard to say on the one cent more part.  If anything I would have thought it been the other way since one tax might have been applied to the total after the first tax had been added.

For example, with two separate taxes a $100 purchase might have become $108 first and then 5% more added to that would make it $113.40 instead of a 13% tax added to $100 making it $113 even.

No idea why the new way comes out to more.

I have seen that a few things will cost even less now because some items were still getting charged at 15% and now they will be 13%.