Ontario Minister of Revenue’s Response to CARP HST Poll

In our last newsletter, CARP ActionOnline we asked readers to weigh in on the decision by the provincial governments of B.C and Ontario to implement a Harmonized Sales Tax (HST) in 2010. The results are in and most polls respondents don’t believe that the tax credits will be sufficient to offset the tax increase created by the HST and 85.4% of them don’t believe that businesses will pass through their savings to consumers. We gave politicians and by-election candidates in B.C. and Ontario the opportunity to comment on the results of our poll. Here are the responses we received by press time:

At a time when seniors need to rely on our health care system the most, our province is feeling the effects of the worst global economic downturn in 80 years.

Seniors need to know that their provincial government will take whatever action is needed to protect our cherished universal health care.

That is why in our 2009 budget we announced the most comprehensive tax reform package in over 40 years. Simply put, in 2010, sales tax on some items would go up, but income taxes would go down.

This is what you need to know about sales taxes: Items that are currently taxed at 5 per cent GST and 8 per cent PST will continue to be taxed at the same rate – 13 per cent.

Items that are both GST and PST exempt, such as basic groceries, prescription drugs, and medical devices, will continue to be exempt.

And there will be items currently taxed at 5 per cent GST that under the HST will be taxed at 13 per cent. But at the same time we will be substantially lowering income taxes for both business and people, especially seniors.

Seniors can expect the following permanent income tax cuts starting next year – first, we’re dropping the personal income tax rate on the first 37,000 of taxable income giving Ontario the lowest rate on the first income tax bracket of any province.

Second, seniors who currently receive the $240 a year federal GST rebate would now receive an additional $260 a year, every year, from the province – tax free.

As well the Ontario Senior Homeowners’ Property Tax Grant is providing up to $250 a year in additional assistance in 2009 to help low- and middle-income seniors stay in their homes. Starting in 2010, the maximum grant will be doubled to $500 a year.

Over the next five years, these grants will provide approximately $1 billion in property tax relief to over 600,000 seniors.

Few people are aware that the current Retail Sales Tax is charged on many items that businesses need to produce the goods and services they provide.

These taxes are not only an impediment for investment, but they become a part of the retail price paid by you, effectively making them a hidden tax.

Removing the hidden tax would provide business the opportunity to invest and to pass the savings on to consumers, as happened in the Atlantic Provinces when they harmonized their sales tax.