Northumberland-Quinte West MPP hosts tax meeting

By Andrew Keogh

Northumberland-Quinte West  M.P.P, Lou Rinaldi, took his Harmonized Sales Tax (H.S.T.) presentation to the Keeler Centre in Colborne on January 21. A group of about 15 people took in the information and posed questions for the M.P.P.

On July 1, 2010, the 13% H.S.T is being instituting province wide. The tax merges the existing 5% G.S.T and 8% P.S.T, and has significant implication for businesses.

The H.S.T will apply to all retail purchases, professional service purchases, fuel and energy purchases, and property purchases. The 31-page hand-out provided to the participants took them through savings outlined by the Ministry of Revenue. The M.P.P. added his own comments to explain the implications for his constituents.

Mr. Rinaldi claims that returns will be seen anywhere between 5 and 10 years and that using the H.S.T. as an investment will produce jobs and growth and keep Canada competitive.

Small businesses and corporations alike can benefit by claiming H.S.T on all business expenses. Under the current structure they cannot claim the P.S.T.

Additionally, R.S.T (retail sales taxes) fronted by retailers on all business inputs (materials and services employed by the business) will be reshuffled into a V.A.T (Value added tax) at all levels from primary producers, to manufacturers to retailers. It is anticipated that these savings will be carried forward to the consumer.

The H.S.T. also will simplify business administration through one set of books, one remittance, one audit etc.
Corporations will be provided $4.5 billion in tax relief over three years through corporate income tax cuts, eliminating surtaxes and exemptions from the corporate minimum tax. . Businesses can also benefit from property tax relief through a marginal reduction in the education levies of property taxes.

Individuals in the lowest and middle income brackets will receive $4 billion in transition relief with rebates for couples and parents of up to $1000.00 and singles up to $300.00.

Personal income taxes for those brackets (i.e $0-$37,106/year) will see a reduction in rates from 6.05 to 5.05% this year. There is an additional $270 million in property tax credits and up to $260.00/adult in sales tax credits, both applying to low and middle income earners.

The H.S.T will apply to all goods and services that are subject to the existing G.S.T. The breakdown provided by the M.P.P. suggests that 83% of goods and services taxes will remain unchanged.

All fuels and energy inputs will have additional taxes placed on them as of July 1, 2010. The H.S.T will be applied on top of existing excise and fuel taxes.

Most private professional services and administration costs like insurance brokerage fees, public transit, hair dressing, and realty charges will fall under the new H.S.T and be paid at point of sale. Any qualified rebates will be returned to the claimant when taxes are filed.

Reports circulated by Revenue Canada claim that the average Ontarian will experience a neutral or very marginal change in expense in the coming years, totaling no more than $50-75 either in deficit or surplus. Estimates claim that the lowest income earners will benefit $90/year on average, and the top income earners in Ontario will have to pay $390 more annually.