Thursday, April 2, 2009

The Good, The Bad, and The Ugly of HST

The Good

Tax experts predict the average Ontario family will be further ahead despite harmonized sales tax. Lower-income families will get hit a bit more, but the tax rebate will cushion that.

Harmonizing GST and PST is good for businesses because it lets them recover money now lost to retail sales taxes and use it for investment in new equipment and machinery. Currently, businesses receive a rebate on the GST, but not PST.

A study of Quebec, Newfoundland, Nova Scotia and New Brunswick - which harmonized their GST and sales taxes - found business investment jumped and prices (of goods & services already taxed) decreased.

In the long run, more jobs will be created (better jobs that require equipment and machinery behind them which may pay better) and increased job security.

The Bad & Ugly

We will be paying more at the checkout.

Homebuyers, especially first-time homebuyers, will find it tougher to afford a home. For a resale house priced at $360,000, a HST could add over $2,000 in new taxes to closing costs. Take a look at the table below:

In total, a HST will add $313 million annually in new taxes to resale home transactions. This will hurt the resale home market, prolonging the housing industry’s recovery from the current economic downturn.

1 comment:

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