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TORONTO -- The harmonized sales tax passed two important hurdles yesterday but the biggest test remains Oct. 6, 2011 -- the date of Ontario's next provincial election.
Votes at both Queen's Park and the House of Commons in Ottawa yesterday sent HST-enabling legislation into law, pending Royal Assent. There now is no roadblock the Official Opposition can mount to prevent the tax from coming into effect next July 1. "It's an historic day for Ontario," Finance Minister Dwight Duncan said shortly after Bill 218 passed third reading at Queen's Park, 56-29.
"It's about creating jobs, it's about responding to the loss of jobs in the auto sector, the forestry sector and it's about a competitive economy moving forward," he said.
Blending Ontario's 8% retail sales tax with the 5% federal goods and services tax for a harmonized 13% tax -- once resisted by Premier Dalton McGuinty -- has now become the Liberals' signature economic policy.
The Provincial Choice Tax Framework Act passed the House of Commons yesterday evening by a vote of 253 to 37.
The change will effectively increase taxes 8% on a wide range of products and services because the old RST wasn't as broadly based as the new HST will be. But combined with a raft of corporate and personal income tax cuts beginning Jan. 1, the government is promising the total effect will benefit the economy and consumers. "Overall, incomes will go up, taxes will be reduced and prices for most goods will come down over time, according to all the experts," Duncan said.
Do you support a harmonized sales tax?
'CREATING JOBS'
He's confident the Liberals will survive any anti-tax backlash at the polls in 2011.
"It's about our children and their futures," Duncan said. "Sometimes you have to take difficult positions and I think voters respect that."
Federal Finance Minister Jim Flaherty had long pressured Ontario to go the HST route. The governing Liberals' solid majority at Queen's Park was always certain to prevail on the HST but Tory Leader Tim Hudak has been pulling every possible delaying tactic he could employ to delay the bill's passage.
"You saw a PC caucus that gave everything we had into fighting this massive tax grab," Hudak said.
But the new tax has fans in the business community, who say the savings from paying one tax, including enhanced input tax credits, will lower costs. "That means there will be savings to the consumer," Len Crispino, president of the Ontario Chamber of Commerce, said.
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THE PRICE OF PROGRESS?
What will be subjected to the new sales tax
- Gasoline
- Utilities (heating/hydro/natural gas)
- Internet bills
- 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)
- New homes over $400,000
- Real estate commissions
- Commercial property rentals
- Condominium 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
- Green fees