How will it reduce costs? They will only have to file one sales tax instead of two and only have to know one set of rules. So yes they will save money. Also wholesalers will not have to worry about all the PST exemption documentations. PST audits and all that CRAP!! I suspect that some saving WILL be passed on as people will be hit by sticker shock and prices will have to be reduced. Overall I suspect it might be a good thing. Thousands of PST bureaucrats will probably lose their jobs. And thousands of businesses will eliminate one annoying and complex administrative task.
Hst
- Thread starter conte
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The working theory is that the savings from not having the PST or the need for monitoring PST exemptions in the production chain will lead to temporarily inflated margins that will be eroded via normal competition. The more concerning part of this is the regressive nature of the tax. It's a harder tax to avoid for those with less money...
I'm somewhat torn on this tax. There are upsides, but I very much think they should have made it with 'maximum excludability' in that it shouldn't have applied to anything that the GST OR PST didn't... Even if they had to bump the rate up by 1% (or whatever) to make it more revenue neutral.
This is my understanding:
The present PST is not applied to services
Only the GST is applied to services.
Therefore, services are now taxed at 5%
The HST will apply to both goods and services.
Therefore, when the HST is introduced, the tax on services will jump from 5% to 13%.
Am I wrong about this? If the above is correct, how is it possible for Terb to conduct a discussion about the merits of the HST, and yet no-one mentions the huge increase in tax on services?
The present PST is not applied to services
Only the GST is applied to services.
Therefore, services are now taxed at 5%
The HST will apply to both goods and services.
Therefore, when the HST is introduced, the tax on services will jump from 5% to 13%.
Am I wrong about this? If the above is correct, how is it possible for Terb to conduct a discussion about the merits of the HST, and yet no-one mentions the huge increase in tax on services?
Roughly correct. That's what I meant above by 'regressive' and how the HST should have been based around 'maximum excludability' even if they had to raid the rate on those things that were taxed.
lol oh yeah? where does it say that? They don't refund any of the existing taxes back to us now so why would they start with the HST?
The ONLY taxes we get back (in a sense) are the taxes we spend on purchases. Then we don't really get it back, just our tax payable is reduced and then that is only on allowable expenditures.......
You are 100% correct on this. The thing the government doesn't realize is that THIS WILL KILL THE ECONOMY which is already suffering. Oh, they will probably complicate matters by putting in clawbacks of some sort or exemptions and create a whole new division in which to manage this new accounting nightmare.....
The thing is: in the short term anyways, I know of more than a few of my customers who have specifically said they won't be doing any planned renos next year after the HST comes into effect due to the increase in cost. I go by the adage: if it is happening to me, it is happening to others. What that means is there are thousands of people who won't be spending money simply due to the increased tax. This effectively is slowing the economy.
Right now, I am almost 99% service only oriented. That means ALL my business will slow or cost more.....
I just want to remind those that maybe weren't around with the old FST was turned into the GST. The FST was a hidden tax added to products before they hit the retail shelves. When the Feds scrapped this their attitude was "consumers will immediately realize a reduction in item costs by 6% due to the difference between the FST at 13% and the then GST at 7% (I think that's what it started out as)". The only problem is retailers DIDN'T drop the prices of items, they simply took the difference as a price increase across the board. I worked for a large retail chain at the time and it was distributed in a memo that this was what they were going to do.........
Reduce prices? How? How on earth can anyone with any imagination think that by adding an additional tax on something will that REDUCE a price?
Sure you could argue that tax calculation will be simpler but do you think that all these companies will realize so much time saving that they could lay off 50% of their accounting staff? LOL not. It is simply changing the percentage point in their software. The rest is automatic.....
This is nothing short of a cash grab by the government. Plain simple and any politician supporting this ought to be ousted IMMEDIATELY. I mean, do you seriously think they will be laying off thousands and thousands of employees? (which is what they say will happen once the provinces don't have to collect PST separately).........
what do you mean refunded? and why? i understand business use to charge GST or something. declare like 3% and keep 2%...something like that...I'm not a business owner but eventually looking to be one. so please explain how this HST will effect me...please =)
No. We collect GST on our sales (in my case invoices for services rendered) and then deduct the GST we paid on eligible purchases. In my case this is materials, tools and equipment, GST on fuel etc etc. The theory behind this is that we should be collecting more than we spend if we're profitable......
I don't collect PST now because material purchases are a direct pass through to my customers with no mark up on my part. I only charge them my time to go make the purchases on their behalf. I have enough trouble managing my GST returns let alone PST as well. This is why I don't mark up materials.......(plus it makes the costs a lot easier to handle by the customers which is why I am mostly very steady with work).
But that's not the point. The point is that the provincial government needs more money and this is a good way to do it. I seem to recall that the liberals have a 21 billion dollar deficit this year. That's rather staggering. The move the HST will bring in an extra 3 billion I believe (I could be wrong, but's the number I seem to recall.)
At the end of the day, this province is HURTING due to the recession and the loss of manufacturing jobs to China. There is less revenue coming in, and the McSquinty liberals have increased spending hugely since taking over from the conservatives.
I mean, really, they could cut gov't spending right back to where it was 10 years ago and most of us would never even notice the difference.
NOT TRUE!
Did you ever hear of a PST Tax Exemption Certificate? Every companty that I worked for has had it. That's what businesses use to NOT pay for the tax when purchasing their raw materials and goods that get incorproated into their products. Don't deny it, unless you are blind.
The question is do we have the to find out. The govt has said they are cutting income taxes and giving rebates to cusion the blow and this will cause the tax to be revenue neutral.
That is probably true, revenue neutral means the govt will not colllect any more taxes in total, ie., 1 dollar before tax change 1 dollar after tax change not change to govt revenue.
The problem is they have already stated that business will pay less so the difference has to come from another tax payer,
look carefully around the room.
Does anybody see another taxpayer , besides us I mean.
That is the problem the taxes will be added to a huge number of things we did not pay taxes on before. The tax cuts will probably not show on most peoples weekly pay slip, and the rebates while nice stop after a while. What happens then?
Correct...PST is charged to the "end user"..everyone else gets a filled out PST Exemption Form WITH a PST Exempt Number.
The PST is antiquated and it does make sense to have one uniform tax that is equally applied. But there is no doubt this is going to hurt consumers and small businesses which is why the province is claiming it will provide relief in the form of refund cheques. I won't hold my breath though since Dalton and gang have told more lies than Pinnochio.
This is a huge tax windfall for the province. Case in point. Businesses only pay GST of 5% on commerical rents. Come July 1, 2010 it goes up 8%, all of that going to the provincial coffers. It's ok if you can claim it as an input tax credit (as an offset to GST collected) but what happens if you're not GST registered? Private day care operators, private educational insitutions, health care service/product companies all take an 8% hit on many products and services that weren't previously taxable - commercial rents, condo fees, legal and accounting fees.
This is a huge tax windfall for the province. Case in point. Businesses only pay GST of 5% on commerical rents. Come July 1, 2010 it goes up 8%, all of that going to the provincial coffers. It's ok if you can claim it as an input tax credit (as an offset to GST collected) but what happens if you're not GST registered? Private day care operators, private educational insitutions, health care service/product companies all take an 8% hit on many products and services that weren't previously taxable - commercial rents, condo fees, legal and accounting fees.
Let's also not forget that the province of Saskatchewan harmonized theirs sales taxes and then a few years later scrapped that and went back to separate sales taxes. I wonder why....
Cheers
There will now only be one tax collector federal government, right now GST goes to them and the PST goes to Ontario Government some jobs will be lost. Now for all the job loses mentioned here many are do to the manufactoring sector and the American $$$. What we need is about an .80 cent on the buck and USA will start buying Canadian again, Ontario is a manufactoring province Alberta is an oil producing province.
Lots of talk here about McGuinty all I say is keep Hudak out of office.
Lots of talk here about McGuinty all I say is keep Hudak out of office.
