People planning how they will spend their $1000 cheque from the provincial government will have to think twice. First not everyone gets the $1000. Families with 2 or more people, this includes single parents, will get the $1000. Single people, including those 65plus, only get $300 – and it’s spread over 3 payments.
The cut-off is $166,600 for families and $82,000 for singles – those with incomes above these amounts will not receive the transitional payments.
These payments were meant to soften the blow from the increase in Retail Sales Taxes due to the new combined tax now applying to goods and services that were not taxable provincially before harmonization. Based on government analysis of consumption patterns, people could be paying from $185 to $1000 more in sales taxes due to this change. The budget papers say that even after the $300/$1000 one time only payments have stopped, taxpayers will still be ahead but that depends on believing that businesses that stand to gain the most from this change will pass their savings through to consumers.
One huge flaw in this analysis is that some products like home heating oil- which is a major expense for most families, especially older Canadians, – is not much subject to competitive pressures.
Instead of exempting essential products like home heating fuel, the government is leaving it to taxpayers to pressure businesses to pass through their savings. Increasing sales taxes is no way to stimulate consumer spending and it in fact hurts most those who have no choice but to spend on necessities.
The Ontario Chamber of Commerce [OCC] was clearly delighted with being able to convince the Province to harmonize the sales taxes, calling it the “biggest single stimulus for the Ontario economy”. At Queen’s Park after the Budget speech, CARP caught up with Len Crispino, President and CEO of the OCC and asked him how this would help the single person who only gets $300 one time only but is faced with a permanent 8% increase in their home heating costs. His answer was that the improved economy would help everybody.
CARP asked Mike Colle MPP to champion the cause of people hit with the new taxes. While he was not necessarily prepared to call for an exemption for home heating fuel, he was willing to lead the charge to encourage businesses who gain from harmonization to pass those savings along to consumers. Since he is the Chief Government Whip, perhaps he can get his caucus colleagues to echo that message as well.
CARP could not get a straight answer from anyone in the lock up about whether mutual funds would now be subject to provincial sales tax but if they are, it would be one more blow for people whose retirement savings have already been hammered.