Meals under $4 exempt from Ontario tax

ANTONELLA ARTUSO, QUEEN'S PARK BUREAU CHIEF

, Last Updated: 5:42 AM ET

It's coffee tax-break time.

Ontario Finance Minister Dwight Duncan announced yesterday his government will not be extending the 8% provincial sales tax to that morning java fix and newspaper when he introduces his harmonized sales tax legislation Monday.

All meals that cost $4, currently exempt under existing sales tax legislation, will remain so when the new tax takes effect July 2010, he said.

The move will cost the provincial treasury an estimated $325 million in tax revenue.

"Today's announcement will benefit virtually all Ontarians on a daily basis and comes at a relatively modest price," Duncan said, during a stop at an Etobicoke Tim Hortons coffee shop.

Items that remain free of the provincial sales tax are single serving food items valued at no more than $4, including sandwiches, salads, fruit or cheese platters, cakes, tarts, ice cream and frozen yogurt.

Print newspapers, but not magazines, will also be exempt.

Duncan said he doesn't anticipate further changes to the HST despite pressure from many sectors, including mutual funds, for a break from the controversial tax.

When the HST kicks in next July, a slew of services and products not currently subject to PST will go up 8%.

Tory MPP Peter Shurman said the $4 meal tax exemption shows the government is prepared to cave to well-organized pressure.

"The difference between this particular reduction and any other reduction is that the food industry has deep pockets that are not available to the citizens of Ontario."

Nick Javor, senior v-p of corporate affairs for Tim Hortons, said the company is delighted the government recognizes that consumers have become used to the PST exemption on low-cost meals.

"People are counting their nickels and dimes," Javor said.

Duncan said the government will also bring in personal, corporate and small business tax breaks that combined with the HST will create an estimated 591,000 jobs over 10 years.

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PUTTING THE 'HARM' IN 'HARMONIZED'

WHAT WILL BE SUBJECT TO HST

Harmonized Sales Tax will be applied to the following:

- Gasoline

- Utilities (heating/hydro/natural gas)

- Internet bills

- Prepared foods $4 or more (e.g., coffee and doughnut)

- Magazines

- Adult footwear under $30

- Admissions under $4 (e.g., swimming pool, skating rink)

- Veterinary care

- Personal services (e.g., hair stylist, massage)

- Professional services (e.g., legal, accountant, mutual fund fees)

- Membership fees (e.g., gym)

- Real estate commissions

- Commercial property rentals

- Condo fees

- Landscaping

- Vitamins

- Most admissions to live theatres

- Taxi fares

- Conferences and seminars

- Dry cleaning

- Carpet cleaning

- Labour costs related to home renovation

- Motor vehicle services (towing, car washing)

- Ice rink rental

- Hotels

- Overnight summer camps

- Domestic air travel

- Domestic rail travel

- Bus tickets

- Christmas trees

- Electrical and plumbing services

- Snowplowing

- Bicycles

- Funeral costs

- Postal stamps and courier fees

- Golf green fees

- New homes over $400,000

Ontario would also provide one of the most generous new housing rebates of its kind in Canada -- a rebate of 75% of the provincial portion of the proposed HST on the first $400,000 of the purchase price of a new home. This would provide a rebate of up to $24,000 for new homes across all price ranges.


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