Hst

[conte]

The government line, that blending the GST with the eight per cent provincial sales tax will reduce costs for businesses, allowing them to lower prices for consumers and hire more staff, was repeated by Finance Minister Dwight Duncan before the vote.

Please explain it to me how the new tax will reduce costs for business.

 

[hamermill]

The government line, that blending the GST with the eight per cent provincial sales tax will reduce costs for businesses, allowing them to lower prices for consumers and hire more staff, was repeated by Finance Minister Dwight Duncan before the vote.

Please explain it to me how the new tax will reduce costs for business.

It will drive them out of business - hence their cost to operate will be much lower

 

[oldjones]

Reducing costs for business is Flaherty's line, better direct the question to him.

 

[Rockslinger]

Please explain it to me how the new tax will reduce costs for business.

Long story short. The HST paid by businesses will be refunded back to them by the government. This means more cash for businesses to expand, lower their prices, increase jobs, etc.

 

[calloway]

In theory anyways.

 

[Hotdog]

The current PST is a very inefficient system, and the tax ends up being embedded in inputs purchased by businesses. This results in higher prices, which are passed on to consumers. It also makes it more difficult to export competitively. Under the HST, businesses can recover the tax they paid on their inputs so there is no cascading of tax (which means there is no tax on tax) - the result is, at least theoretically, that consumers get lower prices and exports increase.

 

[onehunglow]

Long story short. The HST paid by businesses will be refunded back to them by the government. This means more cash for businesses to expand, lower their prices, increase jobs, etc.

Makes no sense at all. Businesses are just tax collectors for the government. We don't get to keep any of it except the tiny amount we get for collecting it.

Already i am being inundated with businesses who want to deal with cash only. I can project by next year that this will become an even bigger problem because no one wants to pays the tax on stuff that now is not taxable.

 

[Keebler Elf]

This is just a hidden form of subsidy to industry.

The theory is that taxes won't increase because business will pass along the administrative savings of a harmonized tax to the customer.

Yeah right, just like business passed along the 1-2% reductions to the GST.

It's such bullshit because the customer is guranteed to pay more taxes but there is no guarantee that business will pass their savings along the customer. Bullshit.

 

[Rockslinger]

Businesses are just tax collectors for the government.

Canada is a nation of tax collectors. (England is a nation of shopkeepers (quoting Napoleon).) The HST is supposed to reduce cash businesses because only declared sales are eligible for a refund of the HST from the government. HST is the system used in most of the countries in the known universe.

 

[Photoboy]

I agree. I don't think that there will be a reduction in pricing due to HST. Instead, businesses will keep the savings (if any) for their own bottom line.

 

[Anynym]

Long story short. The HST paid by businesses will be refunded back to them by the government. This means more cash for businesses to expand, lower their prices, increase jobs, etc.

The PST was exempt previously (by companies filing a PST Exemption Certificate with their suppliers, or getting the PST refunded), for any business larger than a Hobby.

And there was a small amount which the Government allowed businesses to retain for collecting the PST - that does not exist under the GST.

As for "not passing along the GST reduction"? Huh? What is this referring to? GST is a consumption tax, so it's only paid by the end consumer (it's refunded to intermediaries against their taxes collected), and very very few goods or services are "GST Included" that the consumer would not have seen the reduction immediately.

There will be no reductions under the HST, just new taxes on things which were previously exempt from PST.

 

[Rockslinger]

The PST was exempt previously (by companies filing a PST Exemption Certificate with their suppliers, or getting the PST refunded), for any business larger than a Hobby.

True, but the HST will refund the HST on a broader range of goods and services than the old PST exemption system. Anyway, it will reduce the tax systems from the current 2 to 1 so ease the compliance burden on businesses and maybe less billable hours for accountants.

 

[Ref]

The current PST is a very inefficient system, and the tax ends up being embedded in inputs purchased by businesses.

Currently PST is charged to an end-user of the product. That is, when a product is manufactured, the materials that go into it are PST exempt.

The consumer gets it in the end though, and in business the goal is to grow and make money.

The liberal government should be ashamed of themselves for placing the new tax on items such as fuel, heating oil, hydro, etc. They are necessary products/services that are needed to survive. To me, that is just a blatant tax grab.

I hope every one of them get a lump of coal in their stocking come Christmas morning.

 

[Hotdog]

Currently PST is charged to an end-user of the product. That is, when a product is manufactured, the materials that go into it are PST exempt.

Not accurate. PST is charged on many purchases made by businesses in manufacturing goods and providing services, and there ends up being a compounding of tax throughout the manufacturing, distribution and retail supply chain that is ultimately paid by consumers through higher prices. This embedded tax is hidden - ie, we don't see it, but it is significant. The HST will remove much of this hidden tax by refunding sales taxes paid on most business inputs. This will result in lower business costs and prices for many consumer purchases - clearly some prices will rise in the short term and some services that were not previously taxable will become subject to tax. But in a competitive economy, lower prices end up leading to higher sales, so if businesses do not adjust prices to be competitive they won't survive.

 

[james t kirk]

Yeah right, just like business passed along the 1-2% reductions to the GST.

.

How did they not pass along the reductions?

I mean the GST is 5% added on the final price. It is not a hidden tax (like the old Manufacturing Sales tax was).

 

[james t kirk]

Currently PST is charged to an end-user of the product. That is, when a product is manufactured, the materials that go into it are PST exempt.

The consumer gets it in the end though, and in business the goal is to grow and make money.

The liberal government should be ashamed of themselves for placing the new tax on items such as fuel, heating oil, hydro, etc. They are necessary products/services that are needed to survive. To me, that is just a blatant tax grab.

I hope every one of them get a lump of coal in their stocking come Christmas morning.

Completely agree. I was driving home tonight and I was thinking about McSquinty. 5 or 6 years ago, he nailed us with some $895.00 of new taxes - something called a "Health Care Premium" or words to that effect.

Now he's nailing us again because ultimately, this HST is a tax grab.

It would seem Dalton is unable to operate within his means. The recession has ravaged this province. Add to that the dwindling manufacturing sector (everything it seems is "Made in China" these days). The new tax on top of more tax on top of high taxes before that will only make it worse.

 

[gentle_lover]

I agree. I don't think that there will be a reduction in pricing due to HST. Instead, businesses will keep the savings (if any) for their own bottom line.

I agree with this. What makes you think the business will pass the saving to the customer? If they can, of course they will save for their own bottom line. Most likely the price will stay the same or go up. They won't go down. That's for sure. Do you think businesses will give up more saving??? The answer is the leafs won the cup recently.

We all should come out if there is a rally against HST!

 

[ogibowt]

Not accurate. PST is charged on many purchases made by businesses in manufacturing goods and providing services, and there ends up being a compounding of tax throughout the manufacturing, distribution and retail supply chain that is ultimately paid by consumers through higher prices. This embedded tax is hidden - ie, we don't see it, but it is significant. The HST will remove much of this hidden tax by refunding sales taxes paid on most business inputs. This will result in lower business costs and prices for many consumer purchases - clearly some prices will rise in the short term and some services that were not previously taxable will become subject to tax. But in a competitive economy, lower prices end up leading to higher sales, so if businesses do not adjust prices to be competitive they won't survive.

i have some swamp land for sale

regards..govt is the administrative arm of big business

 

[C Dick]

In general, I think that the HST is more good than bad. It is much more efficient to have one tax instead of two, and GST is a more efficient tax than PST, in turns of the complexity of collecting and auditing it.

All GST that a business pays they get a credit for, whereas with PST, you only get credit for things you resell, things you consume, such as office supplies, you pay tax on. So they collect a little more money with PST, but at great cost in terms of waste.

It is true that switching to HST transfers some tax burden from business to consumers. In a perfectly efficient economy, that would all be immediately passed on to consumers in reduced prices. Realistically, it will only be partial. But businesses can't keep the money (or at least they can't enjoy it if they keep it), it gets paid out to owners as salary and dividends, and taxed at that level.

So to me, switching to HST is good overall, but if neccessary it should accompanied by tax rate changes in income taxes to make sure that the overall burden is distributed fairly, however that might be.

 

[Rockslinger]

it should accompanied by tax rate changes in income taxes to make sure that the overall burden is distributed fairly, however that might be.

Finance Minister Duncan said that income tax cuts are coming on January 1st and people making less than $80,000 will be getting a $1,000 rebate cheque to mitigate the HST.