Rational Advisor

This may be the end of the McGuilty government - I think the Fiberals have lost the next election - Not that they really cared, I mean after a few sessions in parliament, those MPPS get a lifetime pension - why should they really care about us the mere peasants.

What have these fiberals done for Ontario well in 2003 when they were elected the debt in Ontario was $110B, now it’s $220B - that’s a doubling.

In this recent budget even the corporate tax advantages they’ve given really favour more exporting companies than manufacturing domestic companies. Also do you really think the corporations will pass on the tax savings to individuals - No!

And people are getting blinded by the $1000 or so, the governments giving back to them, without realizing that the government willg ain around $4.3 Billion from all of us.

It is difficult enough to deal with all the financial stresses that this recession has inflicted without having the government digging deeper into our pockets. The last thing Ontarians can afford is an increase in taxes, and that is what you are getting. I can’t understand why, if they were going to harmonize taxes, to simplify things, they didn’t just reduce PST first and then harmonize! Oh, No, that would be helping the public too much.

The problem here is that politicians only listen once every four years - so, they really don’t care what you have to say about it!

So, tell me why as soon as British Columbia’s commitment to Ottawa’s Harmonized Sales Tax is complete, they’re opting OUT as quick as possible? It is a cash grab that costs taxpayers more and gives the Province less. BC realized too late!

Let’s look at this HST - or the OVAT (Ontario Value Added Tax - where is the Value!)

What is a Harmonized Sales Tax?
Ontario plans a major tax reform that will combine both the provincial and federal sales tax on products and services. The combined tax of five per cent GST and eight per cent Ontario sales tax won’t change the price on most items. But many items that used to be exempt from sales tax will no longer be so.

What is no longer PST exempt?
Consumers are most likely to notice an increase in the price of gasoline and heating fuels. Electricity will no longer be exempt from provincial sales tax, nor will tobacco, personal services like haircuts, membership fees for clubs and gyms, newspapers and magazines, taxi fares and the professional services of lawyers, architects and accountants. Real estate commissions will also be taxed.

Your gas in the car goes up
All fuel costs to transport goods to Ontario go up, which means the cost of your food and everythign else that needs transportation goes up

Will anything remain exempt?
Not a lot. Children’s clothing and footwear, children’s car seats and car booster seats, books, diapers and feminine hygiene products will remain exempt from the provincial portion of the single sales tax. So, as you can see not a lot for the masses.

Basic groceries, rent, condo fees, prescription drugs, and medical devices remain exempt from both PST and GST. Although they will be affected by the increase in transportation to get them into Ontario! so, they will also go up.

Purchase of resale homes will remain exempt from PST, although real estate transaction fees will be taxed - bad for real estate agents.

Why is Ontario doing this?
Simply, they want $4.3B more money, becasue they increased our debt. The provincial government is BSing us by saying that the implementation of the single sales tax would bring Ontario into line with “what is viewed as the most efficient form of sales taxation around the world.” The finance ministry says the single sales tax would reduce the cost of goods that Ontario exports - not true, since it woudl add to the transportation of those goods, making the province more competitive and boosting a sector of the economy that has been particularly hard hit by the economic downturn - again ot true, this has not helped Atlantic Canada or Quebec become more efificent. Apparently it’s better for us, better against who, Somalia!

At the moment, businesses may not deduct the PST from the cost of materials and other products they buy; instead, they pass the cost along to consumers. But under harmonization, businesses may claim tax credits for those purchases, which some estimates suggest could save them $3-billion a year. I don’t think we the consumer will see any of these savings - they’ll just go to higher exec salaries (I want to know if Bernie Madoff was making those estimates)

The Ontario Chamber of Commerce believes a fully blended system would cost consumers approximately $905 million in additional sales taxes per year, while the GST and PST bill for companies would fall by $1.6 billion annually. (apparently Enron accountants now work for the Ontario chamber of Commerce! - it’s costing consumers now, when they don’t want to be hurt, when they are already down)

The Canadian Federation of Independent Businesses says harmonization will save business $100 million a year in reduced red tape. (Where are the numbers to justify this!)

Businesses will save a further $500-million a year on the costs of administering a single tax instead of two, according to the budget documents. This sounds very funny to me, and I’d love to see how they came up with $500 million, but it maybe filed under Fairy Tales.

Are all businesses on side?
Contractors, developers and homebuilders oppose the blending. Ontario’s Building Industry and Land Development Association estimates that a blended tax would add more than $46,000 to the price of a $580,000 new home in Toronto.

A point of contention is the impact the HST will have on Canada’s fund industry and the advisors who sell them. Advisors across Canada can expect to pay an additional 8% on the management expense ratios of most of the funds they sell - simply because most of those funds are domiciled in Ontario.

Both mutual fund and ETF trust structures are taxed as entities apart from the firms that operate them. They were exempt from provincial sales tax but will now have to pay the new 8% sales tax on the management expense and most of the operating costs they incur. Proportionally, this charge is huge when you consider that the operating costs for a fund are a relatively small part of the MER.

So, when your MERs go up - blame McGuilty, actually balme all those people that voted him in as well. Wasn’t me!

Will household expenses rise?
Yes, although the province says it will offer $10.6 billion worth of tax relief over the next three years:

Cash payments of up to $1,000 for in 2010 and 2011 for families earning less than $160,000 a year.
A new permanent $260 refundable sales tax credit for low to middle-income adults and children. An enhanced refundable property tax credit for low and middle-income homeowners and tenants. New homes under $400,000 would be exempt from the new blended tax. $1.1 billion in personal income tax cuts

So what’s the problem?
The provincial NDP says the single sales tax would leave families “feeling the pinch” from having to spend more on a range of goods at a time that many are already struggling to deal with job losses.

The Conservatives, while ideologically in favour of harmonizing, say this is no time to be raising taxes.

Is Ontario alone in this?
Quebec and all the Atlantic provinces except Prince Edward Island have a harmonized sales tax.

When does the new tax begin?
July 1, 2010.

What can you do?

Call up your local Liberal MPP, and remind them not to count on your vote in the next election. Not that they care, they’ve already locked in their life time pension!