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June 14, 2010

Ontario may cut HST by 1% by 2011

CANADA - Ontarians are currently paying 13% HST (Harmonized Sales Tax), which contains within it 5% GST (Goods & Services Tax) and 8% PST (Provincial Sales Tax). However the governing Liberal party in Ontario, led by Dalton McGuinty, is currently contemplating reducing the PST portion by 1%... which would drop the total HST to 12%.

Why should they do this?

1. It boosts the economy by increasing domestic spending in Ontario, which helps both low income families and high income families.

2. It increases cross border shopping from Americans / boosts trade in Ontario's manufacturing, mining and other sectors. Companies save money on their expenses.

3. It would reduce debt load by 1% over time, allowing more people in Ontario to pay off their credit card bills, mortgages, etc.

4. It would reduce Ontario's sales taxes to the same level found in most other provinces. With the exception of PEI (where the HST is 15%), Ontario has the highest sales taxes of any province.

5. Its easier on our brains when calculating how much tax is on an item we intend to buy. 12% is easier to calculate than 13%.

Government coffers will be fine as the HST decrease will also be complimented by a 1% increase in taxes on liquor and tobacco products (thus keeping the prices of those products stable) and a 0.25% increase on corporate taxes / anyone making over $127,021 annually. (Basically rich people would be paying an extra $320+ in income taxes, but at the same time would be saving money on the 1% HST reduction.) Thus it all evens out in the end.

In contrast the average person in Ontario would save about $100 to $250 a year in taxes, depending on how much they like to shop. (And lets face it there is a lot more "average people" than there is rich people.)

To voice your support for a 1% HST cut by 2011 you can email Premier Dalton McGuinty at dmcguinty@premier.gov.on.ca.

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