While present and future participants in the Ontario workforce are poised to benefit from the economic growth that harmonization is expected to produce, these potential benefits will have a negligible impact on retirees and those on fixed income.
The personal income tax relief will have a limited impact on retirees and those on fixed incomes – the overwhelming majority of whom are taxed moderately. Once the HST is implemented, the average consumer will pay approximately $120 more per year for home energy. This price increase will have a damaging effect on low-income seniors who are particularly vulnerable to price increases for basic necessities.
We are told that harmonization was welcomed with open arms in the Maritimes and what we don’t often hear is that on in April 1 1997, three Atlantic Provinces- Newfoundland, Nova Scotia and New Brunswick- implemented their Harmonized Sales Tax they also reduced their provincial tax rates by 3-4%.
The Governments of Nova Scotia as well as Newfoundland and Labrador do provide HST relief for seniors in the form of the Nova Scotia Energy Rebate Program and the Newfoundland and Labrador HST Credit.
– Nova Scotia Energy Rebate Program: a Home Energy Rebate Program provides a rebate equivalent to 8 per cent HST applied to the purchase of all energy sources purchased for home use (heating fuel, natural gas, propane, firewood, wood pellets, coal, kerosene, electricity, fire wood.) The rebate is not income tested.
– Newfoundland and Labrador HST Credit: The HST credit is a refundable tax credit for low income residents of this province. The credit is paid in October of each year and is included with the federal GST credit.
The rebates and exemptions that have been promised in British-Columbia and in Ontario will not be enough to offset the additional tax burden. In an analysis of the special transfers received by the HST participating governments in Atlantic Canada, academic researchers decided that the effect of provincial transfers to consumers would be negligible. Further, in a recent survey of CARP members, 69% of respondents stated that they believed that the scheduled rebates and tax credits would not be enough to offset the tax increases caused by the HST.
The premise that businesses will pass through their savings is not borne out. Academic research indicates that business transfers to consumers did not contribute to a decline in consumer prices in post-HST Atlantic Canada. Furthermore, 85% of CARP members surveyed did not believe that businesses will pass on savings that they incur from tax harmonization to consumers.
For all these reasons, the CARP is calling on the Governments of British-Columbia and Ontario to introduce HST mitigation for home energy costs and provide an HST relief grant to seniors based on income.
Keywords: seniors, HST, tax credits