People in Ontario are about to be hit with rising costs in a big way.
It is difficult enough to deal with all the financial stresses in this
current recession without the government adding more to our plate.
Increased taxes are one of the last things Ontarians can afford and yet
that is what they’ll be getting.
Let’s take a look at this Harmonized Sales Tax:
What is it?
tax reform that will combine both the provincial and federal sales tax
on products and services. The combined tax of five per cent GST and
eight per cent Ontario sales tax won’t change the price on most items.
But many items that used to be exempt from sales tax will no longer be
What is no longer PST exempt?
Consumers are most
likely to notice an increase in the price of gasoline and heating
fuels. Electricity will no longer be exempt from provincial sales tax,
nor will tobacco, personal services like haircuts, membership fees for
clubs and gyms, newspapers and magazines, taxi fares and the
professional services of lawyers, architects and accountants. Real
estate commissions will also be taxed.
Driving will cost much more…
fuel costs to transport goods to Ontario go up, which means the cost of
food and other retail items may rise to offset the higher
What is exempt?
Children’s clothing and
footwear, children’s car seats and car booster seats, books, diapers
and feminine hygiene products will remain exempt from the provincial
portion of the single sales tax. Basic groceries, rent, condo fees,
prescription drugs, and medical devices remain exempt from all taxes.
Although they will be affected by the increase in transportation costs
to get them into Ontario!
On new homes, where GST is already
included, the new tax means another eight per cent provincial tax to
houses worth more than $500,000. New homes worth under $400,000 will
not face the additional tax, while those between $400,000 and $500,000
will pay the tax but get a rebate. Purchase of resale homes will
remain exempt from PST, although real estate transaction fees will be
taxed which is not good news for real estate agents or buyers.
Does this affect people outside of Ontario?
If for example, you are living in BC and own a mutual fund in your RRSP
from a company based in Ontario (where most are based), then you will
see an increase of 8% on your management fees. When our personal
investments are struggling along with the economy, now we have to deal
with higher costs for money management which in turn, lowers net
When does the new tax begin?
July 1, 2010.
can you do?
Aside from calling your local Liberal MPP and letting them
know what you think, recognize that life is about to get more expensive
in many areas and now, more than ever, is the time to budget and look
at your lifestyle and financial situation. Start with the basics of
your family values and beliefs. Build from there and ensure that
everything in your lifestyle reflects your values. Do not live beyond
your means…this advice is more important today than ever before.