5. Businesses might not reduce their base prices after implementation of the HST.
Unless the McGuinty Government also plans to restrict prices that businesses may charge, there is no legal obligation for any business to lower its prices on July 1, 2010. In fact, the HST regime includes unrecoverable HST costs that will be passed on consumers. For example, many businesses engaged in exempt activities (e. g., financial institutions, rental housing, nursing homes, etc.) will pay HST on what they themselves buy. Also, businesses with sales over $10-million will not be able to get 100% input tax credit on some of the HST it pays for at least six years. Over that time, the only other cost-recovery method available to them will be higher prices.
6. Once the HST is implemented, it will be difficult, if not impossible, to undo. According to the Memorandum of Understanding signed by the Mc-Guinty Government, Ontario cannot opt out of the HST regime for five years without risk of massive penalties. No matter how disastrous the HST might be, Ontarians will be locked in to this dubious plan for a long haul.
Lisa MacLeod is the MPP for Nepean-Carleton and the Revenue Critic for the Progressive Conservative Caucus at Queen’s Park. She can be reached at [email protected] Todgham Cherniak, Counsel at Lang Michener LLP, is a sales-tax and trade lawyer and adjunct law professor at Case Western Reserve University School of Law in Cleveland. She can be reached at [email protected].
Keywords: HST
