Tax Harmonization: Where Do You Stand?
As suspected, the recent Ontario government budget introduced a policy of harmonizing the federal goods and services tax (GST) with the provincial sales tax (PST). This policy will see Ontario move to a single value-added sales tax of 13%, effective July 1, 2010. We are told this is a positive move to make manufacturing and exporting costs – and the overall cost of doing business – more competitive for Ontario companies. But does the business community agree or disagree? Some regard this tax harmonization policy as a massive hidden tax on savings, while others think it will simplify tax collection. MB recently asked local business people to submit their views on this controversial new policy. Here’s what a few of them had to say.
“It’s a difficult time to implement such a substantial change to the end user and affect so many more areas with an additional tax. When the economy is slowing, the consumer needs added incentive to purchase, not added costs to basic needs such as heat, hydro and savings. It amazes me that the Ontario government is trying to simplify this and promote it wholeheartedly, yet they’ve not considered reducing the rate to equalize how the tax would be applied. This at least would represent a small effort at reducing the impact. Mailing out ‘cheques’ to those with a lower income is simply a political gimmick which will be forgotten in a minute.” — Janine Purves, Senior Financial Advisor, Assante Capital Management Ltd.
“The biggest problem with harmonization is the lack of understanding of how the current PST system works and how harmonization will change it.” — Glenn Lott, Lott & Company, Chartered Accountants
“A number of us realtors are working together against this tax grab! We have already sent letters. It would affect all aspects of the housing business – our commissions, inspection fees, legal fees, landscaping services (all now exempt). Housing is such a major part of our economy across the province and the whole country. It will be a shame if they get away with this ploy!” — Joyce Ramer, RE/MAX All-Stars Realty Inc.
“There has been a lot of heated debate on our Board and Government Affairs Committee about this – more than any other topic I have seen in my three years on the committee. There will be some losers in this deal, and I think that as a Chamber, we need the government to address these impacts and research them before the plan is implemented. The current GST is far more logically applied than the PST. If we are to harmonize taxes, we need to use the GST as a model, not the PST. Filing only one tax rather than two will bring efficiencies to businesses. In my business as a photographer, we spend a good deal of time keeping track of PST and GST, and then filing them separately. In fairness, there are a good number of positive aspects of this proposed tax as well as negative, but a bigger amount of misunderstanding.”
— David West, Chair GAC and 1st Vice Chair Richmond Hill Chamber of Commerce
Ronald Minken, a leading employment lawyer who writes a regular column in MB, regards this policy as “yet another barrier to justice for companies and individuals alike.” To read his full comment, turn to his article "Tax Harmonization: Barrier to Justice" in the Legal section.
What do you think?
Send your comments regarding this highly controversial issue to don@mbmagazine.ca and we will publish as many as possible in future issues leading up to the introduction of this policy. In the meantime, make your views known to your local MPP: Michael Chan, Markham–Unionville, Tel: 905.305.1935; Dr Helena Jaczek, Oak Ridges–Markham, Tel: 905.294.4931; Reza Moridi, Richmond Hill, Tel: 905.884.8080; Greg Sorbara, Vaughan, Tel: 905.851.0440.
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