Hst

[conte]

The government line, that blending the GST with the eight per cent provincial sales tax will reduce costs for businesses, allowing them to lower prices for consumers and hire more staff, was repeated by Finance Minister Dwight Duncan before the vote.

Please explain it to me how the new tax will reduce costs for business.

[hamermill]

The government line, that blending the GST with the eight per cent provincial sales tax will reduce costs for businesses, allowing them to lower prices for consumers and hire more staff, was repeated by Finance Minister Dwight Duncan before the vote.

Please explain it to me how the new tax will reduce costs for business.

It will drive them out of business - hence their cost to operate will be much lower :mad:

[oldjones]

Reducing costs for business is Flaherty's line, better direct the question to him.

[Rockslinger]

Please explain it to me how the new tax will reduce costs for business.

Long story short. The HST paid by businesses will be refunded back to them by the government. This means more cash for businesses to expand, lower their prices, increase jobs, etc.

[calloway]

In theory anyways.

[Hotdog]

The current PST is a very inefficient system, and the tax ends up being embedded in inputs purchased by businesses. This results in higher prices, which are passed on to consumers. It also makes it more difficult to export competitively. Under the HST, businesses can recover the tax they paid on their inputs so there is no cascading of tax (which means there is no tax on tax) - the result is, at least theoretically, that consumers get lower prices and exports increase.

[onehunglow]

Long story short. The HST paid by businesses will be refunded back to them by the government. This means more cash for businesses to expand, lower their prices, increase jobs, etc.

Makes no sense at all. Businesses are just tax collectors for the government. We don't get to keep any of it except the tiny amount we get for collecting it.

Already i am being inundated with businesses who want to deal with cash only. I can project by next year that this will become an even bigger problem because no one wants to pays the tax on stuff that now is not taxable.

[Keebler Elf]

This is just a hidden form of subsidy to industry.

The theory is that taxes won't increase because business will pass along the administrative savings of a harmonized tax to the customer.

Yeah right, just like business passed along the 1-2% reductions to the GST. :rolleyes:

It's such bullshit because the customer is guranteed to pay more taxes but there is no guarantee that business will pass their savings along the customer. Bullshit.

[Rockslinger]

Businesses are just tax collectors for the government.

Canada is a nation of tax collectors. (England is a nation of shopkeepers (quoting Napoleon).) The HST is supposed to reduce cash businesses because only declared sales are eligible for a refund of the HST from the government. HST is the system used in most of the countries in the known universe.

[Photoboy]

I agree. I don't think that there will be a reduction in pricing due to HST. Instead, businesses will keep the savings (if any) for their own bottom line.

[Anynym]

Long story short. The HST paid by businesses will be refunded back to them by the government. This means more cash for businesses to expand, lower their prices, increase jobs, etc.The PST was exempt previously (by companies filing a PST Exemption Certificate with their suppliers, or getting the PST refunded), for any business larger than a Hobby.

And there was a small amount which the Government allowed businesses to retain for collecting the PST - that does not exist under the GST.

As for "not passing along the GST reduction"? Huh? What is this referring to? GST is a consumption tax, so it's only paid by the end consumer (it's refunded to intermediaries against their taxes collected), and very very few goods or services are "GST Included" that the consumer would not have seen the reduction immediately.

There will be no reductions under the HST, just new taxes on things which were previously exempt from PST.

[Rockslinger]

The PST was exempt previously (by companies filing a PST Exemption Certificate with their suppliers, or getting the PST refunded), for any business larger than a Hobby.

True, but the HST will refund the HST on a broader range of goods and services than the old PST exemption system. Anyway, it will reduce the tax systems from the current 2 to 1 so ease the compliance burden on businesses and maybe less billable hours for accountants.

[Ref]

The current PST is a very inefficient system, and the tax ends up being embedded in inputs purchased by businesses.

Currently PST is charged to an end-user of the product. That is, when a product is manufactured, the materials that go into it are PST exempt.

The consumer gets it in the end though, and in business the goal is to grow and make money.

The liberal government should be ashamed of themselves for placing the new tax on items such as fuel, heating oil, hydro, etc. They are necessary products/services that are needed to survive. To me, that is just a blatant tax grab.

I hope every one of them get a lump of coal in their stocking come Christmas morning.

[Hotdog]

Currently PST is charged to an end-user of the product. That is, when a product is manufactured, the materials that go into it are PST exempt.

Not accurate. PST is charged on many purchases made by businesses in manufacturing goods and providing services, and there ends up being a compounding of tax throughout the manufacturing, distribution and retail supply chain that is ultimately paid by consumers through higher prices. This embedded tax is hidden - ie, we don't see it, but it is significant. The HST will remove much of this hidden tax by refunding sales taxes paid on most business inputs. This will result in lower business costs and prices for many consumer purchases - clearly some prices will rise in the short term and some services that were not previously taxable will become subject to tax. But in a competitive economy, lower prices end up leading to higher sales, so if businesses do not adjust prices to be competitive they won't survive.

[james t kirk]

Yeah right, just like business passed along the 1-2% reductions to the GST. :rolleyes:

.

How did they not pass along the reductions?

I mean the GST is 5% added on the final price. It is not a hidden tax (like the old Manufacturing Sales tax was).

[james t kirk]

Currently PST is charged to an end-user of the product. That is, when a product is manufactured, the materials that go into it are PST exempt.

The consumer gets it in the end though, and in business the goal is to grow and make money.

The liberal government should be ashamed of themselves for placing the new tax on items such as fuel, heating oil, hydro, etc. They are necessary products/services that are needed to survive. To me, that is just a blatant tax grab.

I hope every one of them get a lump of coal in their stocking come Christmas morning.

Completely agree. I was driving home tonight and I was thinking about McSquinty. 5 or 6 years ago, he nailed us with some $895.00 of new taxes - something called a "Health Care Premium" or words to that effect.

Now he's nailing us again because ultimately, this HST is a tax grab.

It would seem Dalton is unable to operate within his means. The recession has ravaged this province. Add to that the dwindling manufacturing sector (everything it seems is "Made in China" these days). The new tax on top of more tax on top of high taxes before that will only make it worse.

[gentle_lover]

I agree. I don't think that there will be a reduction in pricing due to HST. Instead, businesses will keep the savings (if any) for their own bottom line.
I agree with this. What makes you think the business will pass the saving to the customer? If they can, of course they will save for their own bottom line. Most likely the price will stay the same or go up. They won't go down. That's for sure. Do you think businesses will give up more saving??? The answer is the leafs won the cup recently.

We all should come out if there is a rally against HST!

[ogibowt]

Not accurate. PST is charged on many purchases made by businesses in manufacturing goods and providing services, and there ends up being a compounding of tax throughout the manufacturing, distribution and retail supply chain that is ultimately paid by consumers through higher prices. This embedded tax is hidden - ie, we don't see it, but it is significant. The HST will remove much of this hidden tax by refunding sales taxes paid on most business inputs. This will result in lower business costs and prices for many consumer purchases - clearly some prices will rise in the short term and some services that were not previously taxable will become subject to tax. But in a competitive economy, lower prices end up leading to higher sales, so if businesses do not adjust prices to be competitive they won't survive.

i have some swamp land for sale

regards..govt is the administrative arm of big business

[C Dick]

In general, I think that the HST is more good than bad. It is much more efficient to have one tax instead of two, and GST is a more efficient tax than PST, in turns of the complexity of collecting and auditing it.

All GST that a business pays they get a credit for, whereas with PST, you only get credit for things you resell, things you consume, such as office supplies, you pay tax on. So they collect a little more money with PST, but at great cost in terms of waste.

It is true that switching to HST transfers some tax burden from business to consumers. In a perfectly efficient economy, that would all be immediately passed on to consumers in reduced prices. Realistically, it will only be partial. But businesses can't keep the money (or at least they can't enjoy it if they keep it), it gets paid out to owners as salary and dividends, and taxed at that level.

So to me, switching to HST is good overall, but if neccessary it should accompanied by tax rate changes in income taxes to make sure that the overall burden is distributed fairly, however that might be.

[Rockslinger]

it should accompanied by tax rate changes in income taxes to make sure that the overall burden is distributed fairly, however that might be.

Finance Minister Duncan said that income tax cuts are coming on January 1st and people making less than $80,000 will be getting a $1,000 rebate cheque to mitigate the HST.

[nottyboi]

How will it reduce costs? They will only have to file one sales tax instead of two and only have to know one set of rules. So yes they will save money. Also wholesalers will not have to worry about all the PST exemption documentations. PST audits and all that CRAP!! I suspect that some saving WILL be passed on as people will be hit by sticker shock and prices will have to be reduced. Overall I suspect it might be a good thing. Thousands of PST bureaucrats will probably lose their jobs. And thousands of businesses will eliminate one annoying and complex administrative task.

[The Options Menu]

How will it reduce costs? They will only have to file one sales tax instead of two and only have to know one set of rules. So yes they will save money. Also wholesalers will not have to worry about all the PST exemption documentations. PST audits and all that CRAP!! I suspect that some saving WILL be passed on as people will be hit by sticker shock and prices will have to be reduced. Overall I suspect it might be a good thing. Thousands of PST bureaucrats will probably lose their jobs. And thousands of businesses will eliminate one annoying and complex administrative task.

The working theory is that the savings from not having the PST or the need for monitoring PST exemptions in the production chain will lead to temporarily inflated margins that will be eroded via normal competition. The more concerning part of this is the regressive nature of the tax. It's a harder tax to avoid for those with less money...

I'm somewhat torn on this tax. There are upsides, but I very much think they should have made it with 'maximum excludability' in that it shouldn't have applied to anything that the GST OR PST didn't... Even if they had to bump the rate up by 1% (or whatever) to make it more revenue neutral.

[buttercup]

This is my understanding:
The present PST is not applied to services
Only the GST is applied to services.
Therefore, services are now taxed at 5%
The HST will apply to both goods and services.
Therefore, when the HST is introduced, the tax on services will jump from 5% to 13%.

Am I wrong about this? If the above is correct, how is it possible for Terb to conduct a discussion about the merits of the HST, and yet no-one mentions the huge increase in tax on services?

[The Options Menu]

Am I wrong about this? If the above is correct, how is it possible for Terb to conduct a discussion about the merits of the HST, and yet no-one mentions the huge increase in tax on services?

Roughly correct. That's what I meant above by 'regressive' and how the HST should have been based around 'maximum excludability' even if they had to raid the rate on those things that were taxed.

[gabeti]

Time will tell better ...

[tboy]

Long story short. The HST paid by businesses will be refunded back to them by the government. This means more cash for businesses to expand, lower their prices, increase jobs, etc.

lol oh yeah? where does it say that? They don't refund any of the existing taxes back to us now so why would they start with the HST?

The ONLY taxes we get back (in a sense) are the taxes we spend on purchases. Then we don't really get it back, just our tax payable is reduced and then that is only on allowable expenditures.......

[tboy]

This is my understanding:
The present PST is not applied to services
Only the GST is applied to services.
Therefore, services are now taxed at 5%
The HST will apply to both goods and services.
Therefore, when the HST is introduced, the tax on services will jump from 5% to 13%.

Am I wrong about this? If the above is correct, how is it possible for Terb to conduct a discussion about the merits of the HST, and yet no-one mentions the huge increase in tax on services?

You are 100% correct on this. The thing the government doesn't realize is that THIS WILL KILL THE ECONOMY which is already suffering. Oh, they will probably complicate matters by putting in clawbacks of some sort or exemptions and create a whole new division in which to manage this new accounting nightmare.....

The thing is: in the short term anyways, I know of more than a few of my customers who have specifically said they won't be doing any planned renos next year after the HST comes into effect due to the increase in cost. I go by the adage: if it is happening to me, it is happening to others. What that means is there are thousands of people who won't be spending money simply due to the increased tax. This effectively is slowing the economy.

Right now, I am almost 99% service only oriented. That means ALL my business will slow or cost more.....

I just want to remind those that maybe weren't around with the old FST was turned into the GST. The FST was a hidden tax added to products before they hit the retail shelves. When the Feds scrapped this their attitude was "consumers will immediately realize a reduction in item costs by 6% due to the difference between the FST at 13% and the then GST at 7% (I think that's what it started out as)". The only problem is retailers DIDN'T drop the prices of items, they simply took the difference as a price increase across the board. I worked for a large retail chain at the time and it was distributed in a memo that this was what they were going to do.........

[Medman52]

This means more cash for businesses to expand, lower their prices, increase jobs, etc.

In theory?..yes....in practice?..still to be seen.

[tboy]

In theory?..yes....in practice?..still to be seen.

Reduce prices? How? How on earth can anyone with any imagination think that by adding an additional tax on something will that REDUCE a price?

Sure you could argue that tax calculation will be simpler but do you think that all these companies will realize so much time saving that they could lay off 50% of their accounting staff? LOL not. It is simply changing the percentage point in their software. The rest is automatic.....

This is nothing short of a cash grab by the government. Plain simple and any politician supporting this ought to be ousted IMMEDIATELY. I mean, do you seriously think they will be laying off thousands and thousands of employees? (which is what they say will happen once the provinces don't have to collect PST separately).........

[SoulPancake]

Long story short. The HST paid by businesses will be refunded back to them by the government. This means more cash for businesses to expand, lower their prices, increase jobs, etc.

what do you mean refunded? and why? i understand business use to charge GST or something. declare like 3% and keep 2%...something like that...I'm not a business owner but eventually looking to be one. so please explain how this HST will effect me...please =)

[tboy]

what do you mean refunded? and why? i understand business use to charge GST or something. declare like 3% and keep 2%...something like that...I'm not a business owner but eventually looking to be one. so please explain how this HST will effect me...please =)

No. We collect GST on our sales (in my case invoices for services rendered) and then deduct the GST we paid on eligible purchases. In my case this is materials, tools and equipment, GST on fuel etc etc. The theory behind this is that we should be collecting more than we spend if we're profitable......

I don't collect PST now because material purchases are a direct pass through to my customers with no mark up on my part. I only charge them my time to go make the purchases on their behalf. I have enough trouble managing my GST returns let alone PST as well. This is why I don't mark up materials.......(plus it makes the costs a lot easier to handle by the customers which is why I am mostly very steady with work).

[james t kirk]

In general, I think that the HST is more good than bad. It is much more efficient to have one tax instead of two, and GST is a more efficient tax than PST, in turns of the complexity of collecting and auditing it.

All GST that a business pays they get a credit for, whereas with PST, you only get credit for things you resell, things you consume, such as office supplies, you pay tax on. So they collect a little more money with PST, but at great cost in terms of waste.

It is true that switching to HST transfers some tax burden from business to consumers. In a perfectly efficient economy, that would all be immediately passed on to consumers in reduced prices. Realistically, it will only be partial. But businesses can't keep the money (or at least they can't enjoy it if they keep it), it gets paid out to owners as salary and dividends, and taxed at that level.

So to me, switching to HST is good overall, but if neccessary it should accompanied by tax rate changes in income taxes to make sure that the overall burden is distributed fairly, however that might be.

But that's not the point. The point is that the provincial government needs more money and this is a good way to do it. I seem to recall that the liberals have a 21 billion dollar deficit this year. That's rather staggering. The move the HST will bring in an extra 3 billion I believe (I could be wrong, but's the number I seem to recall.)

At the end of the day, this province is HURTING due to the recession and the loss of manufacturing jobs to China. There is less revenue coming in, and the McSquinty liberals have increased spending hugely since taking over from the conservatives.

I mean, really, they could cut gov't spending right back to where it was 10 years ago and most of us would never even notice the difference.

[shakenbake]

Not accurate. PST is charged on many purchases made by businesses in manufacturing goods and providing services, and there ends up being a compounding of tax throughout the manufacturing, distribution and retail supply chain that is ultimately paid by consumers through higher prices.

NOT TRUE!

Did you ever hear of a PST Tax Exemption Certificate? Every companty that I worked for has had it. That's what businesses use to NOT pay for the tax when purchasing their raw materials and goods that get incorproated into their products. Don't deny it, unless you are blind.

[landscaper]

Time will tell better ...

The question is do we have the to find out. The govt has said they are cutting income taxes and giving rebates to cusion the blow and this will cause the tax to be revenue neutral.

That is probably true, revenue neutral means the govt will not colllect any more taxes in total, ie., 1 dollar before tax change 1 dollar after tax change not change to govt revenue.

The problem is they have already stated that business will pay less so the difference has to come from another tax payer,

look carefully around the room.

Does anybody see another taxpayer , besides us I mean.

That is the problem the taxes will be added to a huge number of things we did not pay taxes on before. The tax cuts will probably not show on most peoples weekly pay slip, and the rebates while nice stop after a while. What happens then?

[Medman52]

NOT TRUE!

Did you ever hear of a PST Tax Exemption Certificate? Every companty that I worked for has had it. That's what businesses use to NOT pay for the tax when purchasing their raw materials and goods that get incorproated into their products. Don't deny it, unless you are blind.

Correct...PST is charged to the "end user"..everyone else gets a filled out PST Exemption Form WITH a PST Exempt Number.

[onehunglow]

Canada is a nation of tax collectors. (England is a nation of shopkeepers (quoting Napoleon).) The HST is supposed to reduce cash businesses because only declared sales are eligible for a refund of the HST from the government. HST is the system used in most of the countries in the known universe.

and likely in the unknown universe as well.

[SoulPancake]

No. We collect GST on our sales (in my case invoices for services rendered) and then deduct the GST we paid on eligible purchases. In my case this is materials, tools and equipment, GST on fuel etc etc. The theory behind this is that we should be collecting more than we spend if we're profitable......

I don't collect PST now because material purchases are a direct pass through to my customers with no mark up on my part. I only charge them my time to go make the purchases on their behalf. I have enough trouble managing my GST returns let alone PST as well. This is why I don't mark up materials.......(plus it makes the costs a lot easier to handle by the customers which is why I am mostly very steady with work).

thx alot

[K Douglas]

The PST is antiquated and it does make sense to have one uniform tax that is equally applied. But there is no doubt this is going to hurt consumers and small businesses which is why the province is claiming it will provide relief in the form of refund cheques. I won't hold my breath though since Dalton and gang have told more lies than Pinnochio.
This is a huge tax windfall for the province. Case in point. Businesses only pay GST of 5% on commerical rents. Come July 1, 2010 it goes up 8%, all of that going to the provincial coffers. It's ok if you can claim it as an input tax credit (as an offset to GST collected) but what happens if you're not GST registered? Private day care operators, private educational insitutions, health care service/product companies all take an 8% hit on many products and services that weren't previously taxable - commercial rents, condo fees, legal and accounting fees.

[shrek71]

Time will tell better ...

Let's also not forget that the province of Saskatchewan harmonized theirs sales taxes and then a few years later scrapped that and went back to separate sales taxes. I wonder why.... :rolleyes:

Cheers

[buckwheat1]

There will now only be one tax collector federal government, right now GST goes to them and the PST goes to Ontario Government some jobs will be lost. Now for all the job loses mentioned here many are do to the manufactoring sector and the American $$$. What we need is about an .80 cent on the buck and USA will start buying Canadian again, Ontario is a manufactoring province Alberta is an oil producing province.
Lots of talk here about McGuinty all I say is keep Hudak out of office.

[landscaper]

There will now only be one tax collector federal government, right now GST goes to them and the PST goes to Ontario Government some jobs will be lost. Now for all the job loses mentioned here many are do to the manufactoring sector and the American $$$. What we need is about an .80 cent on the buck and USA will start buying Canadian again, Ontario is a manufactoring province Alberta is an oil producing province.
Lots of talk here about McGuinty all I say is keep Hudak out of office.

I keep hearing about an .80 cent dollar to help out the manufactures, how about during all those 62 to 64 cent years they invest in their companies and modernize in order to compete at par..... oh to late

[buckwheat1]

many companies made big bucks when the buck was low, Americans came and bought many things, tourism was booming, macufactoring ect. Well I can say when were close to par it doesn't make me travel south!!! Canadians have a higher standard of living then Amereicans

[shakenbake]

Not accurate. PST is charged on many purchases made by businesses in manufacturing goods and providing services, and there ends up being a compounding of tax throughout the manufacturing, distribution and retail supply chain that is ultimately paid by consumers through higher prices. This embedded tax is hidden - ie, we don't see it, but it is significant. The HST will remove much of this hidden tax by refunding sales taxes paid on most business inputs. This will result in lower business costs and prices for many consumer purchases - clearly some prices will rise in the short term and some services that were not previously taxable will become subject to tax. But in a competitive economy, lower prices end up leading to higher sales, so if businesses do not adjust prices to be competitive they won't survive.

That is a load of bull.

Time for Business 101 for you.

Once again, I repeat, every company that I ever worked for had a PST exemption certificate that had to be used when buying items that were destined to be used in our products. The END USER is the only one who should be paying PST on the item. My brother and others I know who have had a personal business for many years have a PST exemption certificate that they muse when buying supplies for their businesses.

[tboy]

The PST element of the HST will behave like the GST when harmonized.

Businesses that are not PST exempt now, have PST as a buried cost, and must mark that cost up.

Under HST, PST paid on supplies, materials or equipment will become Input Tax Credits (like GST).

Therefore, the business will not pass on or markup the PST cost of inputs to end users, and only charge PST on their value-added services or goods.

Frankly, it's not revenue neutral and will be a new tax in the grand scheme of things [EDIT] possibly with higher administration costs (at least in the beginning).

John: I think you missed the post that explained that COMPANIES DO NOT PAY PST ON PURCHASED ITEMS FOR INCORPORATION INTO PRODUCTS FOR RESALE. They are exempt. Only the end user pays PST.

The thing about this HST is: It wont' help anybody except the government. If anyone thinks it will benefit them, they are delusional.

If the government, haha IF lol, needs more money, then they should cut staff, benefits, ridiculous pensions for person who served 2 terms, etc. Just like any other corporation in the WORLD.

In case anyone who owns a condo missed this, YOUR MAINTENANCE costs are about to go up 8%...that is on TOP of whatever your board increases it to maintain their reserve fund/budget.

[buttercup]

Looking at the posts on this thread, I really don't understand where the Terb thinkers are coming from. When the HST is introduced, the tax on services will go up fom 5% to 13%.

Let me repeat that statement: THE TAX ON SERVICES WILL GO UP FROM 5% TO 13%!

Why don't our good Terb posters see that that is the BIG DEAL? Why are we bothering with pettifogging irrelevancies like which collection system is more efficient and whether some retailers might be motivated to pass on tax savings?

THE TAX ON SERVICES WILL GO UP FROM 5% TO 13%!

We are becoming, more and more, a service economy. Any service for which you now pay 5% GST, you will have to pay 13% HST. Look at the bills you pay now -- how many of them attract GST but not PST? Those are the bills that will be affected. It could be as much as half the bills you pay, depending what you spend your money on.

The government must be laughing heartily, that they've got us arguing about things like collection efficiencies.

[fearnoevil2005]

I still don't understand how this HST thing got passed the the face of many objections. Is someone dropping the ball somewhere or is everyone an in-the-closet supporter of mc guinty and his socialist BS?

[Keyra]

I still don't understand how this HST thing got passed the the face of many objections. Is someone dropping the ball somewhere or is everyone an in-the-closet supporter of mc guinty and his socialist BS?

The people don't have to be supporters of any leader or his party for bad laws to come about. The term we need to remember here is majority government.

*Any* majority government in *any* province or federally can pass *any* law it pleases because it has a majority of votes in its applicable parliament. Period.

It doesn't matter if every last citizen, as well as every last opposition MP of Canada or that province is dead-set against the law, it will get passed, simply because the majority government cannot lose a vote in the parliament. I've heard some of my clients refer to majority governments as 4-year Canadian dictatorships, and it's true - they can do whatever they damn well please until the next election rolls around.

I went and looked up some history on the GST, and look what I found. Brian Mulroney, who I frankly don't remember (I'm only 23) but I'm told was hated back in the 80s and early 90s, introduced the GST in 1989 even though just about everyone in Canada was against it. Why? Him and his Conservatives in Ottawa had a majority government and rammed it through the House of Commons. And when the Liberals, who held a majority in the Senate, tried to block it, Mulroney went and used a little-known and never-before-used clause buried in the constitution somewhere arbitrarily to appoint 8 more Senators so that his Conservatives would have a majority in the Senate too, and then they rammed it through there as well.

It's the same today. The provincial Liberals with McGillicutty, MsSquinty (or whatever his name is) have a majority. So they're ramming through this HST thing, in spite of everyone being against it. I swear, majority governments just love ramming things through, especially if the people are against it. There's an escorting joke in there somewhere, I just know it, but I'm too tired to find it and make it right now, lol.

[friendsonfire]

The HST is probably revenue neutral. That is a term governments use when they are not collecting more tax just shifting it to someone else. People who buy gas or heat their homes, etc. Business gets tax breaks...again. We pay, again.

Don't worry about this being some socialist scourge. It's right from the Conservative playbook. Let business do whatever they want and tax everybody else. It's called trickle down economics. A nefarious theory at best, proven wrong, and yet still popular with the right wing set. If the rich get rich enough they just might create a job. Don't hold your breath waiting for that job.

[tboy]

Actually, this doesn't benefit businesses one bit. It hurts them. It doesn't save them money by simplifying anything, this is only a simple upgrade to software. You push a button the software tells you how much tax to pay.

There is NO cost savings whatsoever to businesses. In fact, most businesses have a service dept and that service dept will be hurt by this tax due to the increase in cost to the end users (customers).

This "revenue neutral" term is a load of crap. We're supposed to realize a cost savings via a reduction in our income taxes but I have yet to ever see it. Sure, I get about $400.00 a year back in GST repayments but I pay a shit load more than that in taxes (at time of purchase and in income taxes).

For eg: you pay $400.00 for condo maintenance. Plus currect gst of 5%, that totals $420.00. With the HST in place, the taxes will total $52.00 a month. That's a total of $452.00 x 12 months $5424. That's $384.00 a year more.

[insidevoice]

The poor stay poor, the rich get rich / That's how it goes / Everybody knows

[Tangwhich]

I went and looked up some history on the GST, and look what I found. Brian Mulroney, who I frankly don't remember (I'm only 23) but I'm told was hated back in the 80s and early 90s, introduced the GST in 1989 even though just about everyone in Canada was against it.

Not that I was a fan of the GST, I would like to point out that it was in the conservative promise for the election prior to its introduction. Most people don't know this because Free Trade was the big issue at the time. This HST was sprung in the middle of a term with no warning.

[buttercup]

The HST is probably Revenue Neutral? Are you mad?

The HST increases the tax on services from 5% to 13%.

You could be spending half your money on services, now taxed at 5%. (Assuming, of course, that all service providers actually charge GST.)

Excuse me, but I don't call that "neutral". I'm not that far from calling it thieving.


The HST doesn't benefit businesses? You've said a mouthful there. If you are in a service business, which now charges GST but not PST, you will have to add an extra 8% to all your invoices. That is what you call a "detriment to busienss".

It's even worse if you are competing with non-Canadian firms, because your Canadian clients will be able to get the same service you offer, but from US/overseas, and they will not pay any tax at all. How many will be able to eat that at 13%?

The HST is the government way of promoting business? I should cocoa!
The HST is the government way of imposing a substantial increase in taxes.

[Rockslinger]

The HST is probably Revenue Neutral? Are you mad?
The HST increases the tax on services from 5% to 13%.

You have to look at the entire package and not just the headline. (Similar to your boyfriend, you have to look at the whole package and not just his "package":p).

1) Businesses will receive a refund of the HST. This leaves more money for them to lower prices and create new jobs.
2) People making less than $80K will get a $1,000 government cheque.
3) Finance Minister Duncan promise income tax cuts starting in 3 weeks.

[tboy]

You have to look at the entire package and not just the headline. (Similar to your boyfriend, you have to look at the whole package and not just his "package":p)..

1) Businesses will receive a refund of the HST. This leaves more money for them to lower prices and create new jobs. Why? we don't receive ANY refund for any existing taxes now. Please show me a link that states we'll get any sort of refund.......2) People making less than $80K will get a $1,000 government cheque. Bullshit, I don't believe that crap for a second. The government doesn't give ANYONE making $80K any sort of refund. Maybe $25K, but not $80.......
3) Finance Minister Duncan promise income tax cuts starting in 3 weeks I'll believe that when I see it....and in typical government fashion they'll promise straight across the board tax cuts, then anyone who makes more than $30K per household will be suddenly EXEMPT and then if you own a car, a house, have a cat, once smoked pot and probably 72,000 other reasons will make you exempt......

[Rockslinger]

we don't receive ANY refund for any existing taxes now.

Eligible businesses are eligible for a refund of the current 5% GST that they pay on their purchases of goods and services.

[buttercup]

I'm sorry, but I still don't see it. I am amazed how our good terbite thinkers, usually so erudite, are so willing to consider the HST as maybe neutral, or maybe even a good thing.

The HST will increase tax on services from 5% to 13%. That means very many consumer invoices will increase by 8%. Sure, it's neutral for some businesses. But it's not neutral for businesses that provide services to consumers. They will have to add an extra 8% to their invoices. We're all of us consumers, even if some of us are also businesses.

How can you possibly think that anything is worth saying about the HST, when compared with the fact that the HST will increase the fakking tax on services from 5% to 13%?

Or is it me, that's living in a daze?

[Rockslinger]

the HST will increase the tax on services from 5% to 13%?

True but this should be offset by a lower price on manufactured and imported goods because manufacturers and importers will be eligible under the new system to recover the 8% PST that is not currently refundable.

[tboy]

True but this should be offset by a lower price on manufactured and imported goods because manufacturers and importers will be eligible under the new system to recover the 8% PST that is not currently refundable.

Rock: it isn't refundable because IT ISN"T PAYABLE...what part of that don't you understand? Companies that purchase goods for resale DO NOT PAY PST on those items!!!

As for REFUNDS the portion of GST we pay on eligible purchases (operative word there is ELIGABLE) is a CREDIT not a refund. The odds of getting a credit is very very VERY rare because any company that can stay in business sells products for more than they pay for goods or services. If a company continually gets a credit on their GST returns I can guarantee you the Feds will be doing a very detailed audit.

SInce you seen to not understand let me explain it to you:

Company A buys a box of screws for $10.00 and pays 5% GST on that box. That's 50 cents. They sell that box of screws to Joe Carpenter at $12.99. Joe carpenter pays GST of 65 cents. COmpany A collects this 65 cents, deducts the 50 cents they paid out, and the Feds get the 15 cents, and the company makes $2.99 on the sale. They pay wages, corporate taxes, etc etc out of that profit.

If they don't collect any GST, the Feds won't let them stay in business long. the only companies that operate in this manner are registered charities. (I forget what the rule of thumb to turn a profit is, I've heard 5 yrs but that doesn't make it so).

[shakenbake]

I still don't understand how this HST thing got passed the the face of many objections. Is someone dropping the ball somewhere or is everyone an in-the-closet supporter of mc guinty and his socialist BS?

The present government has a strong majority. A majority given to them by the average Ontario voter. Did you miss the last provincial election result?

[Rockslinger]

Company A buys a box of screws for $10.00 and pays 5% GST on that box. That's 50 cents. They sell that box of screws to Joe Carpenter at $12.99. Joe carpenter pays GST of 65 cents. COmpany A collects this 65 cents, deducts the 50 cents they paid out, and the Feds get the 15 cents, and the company makes $2.99 on the sale.

Here is an example using an exporter of screws. EXPORTER buys a box of screws for $10 pays $0.50 GST on that box. They sell that box to a non-resident of Canada. No GST is collected on the sale to the non-resident. EXPORTER applies for and receives a cash refund from Ottawa of the $0.50 it paid on the original purchase of the screws.

[tboy]

Here is an example using an exporter of screws. EXPORTER buys a box of screws for $10 pays $0.50 GST on that box. They sell that box to a non-resident of Canada. No GST is collected on the sale to the non-resident. EXPORTER applies for and receives a cash refund from Ottawa of the $0.50 it paid on the original purchase of the screws.

BONG wrong......the non-resident pays the GST then applies for a refund after he returns home.

ALL BUSINESSES IN CANADA ARE REQUIRED TO COLLECT GST AT POS.....

[Rockslinger]

.....the non-resident pays the GST then applies for a refund after he returns home.

I am referring to a real non-resident (say Nokia) who does not return to Canada.

tboy, my boss paid $1,000 an hour to a major accounting firm to analyze the impact of the HST on our business and we are satisfied that the impact is positive for our business.

[tboy]

I am referring to a real non-resident (say Nokia) who does not return to Canada.

tboy, my boss paid $1,000 an hour to a major accounting firm to analyze the impact of the HST on our business and we are satisfied that the impact is positive for our business.

obviously you're not a service oriented business otherwise it would negatively impact your business and you wouldn't need to spend $1000.00 an hour to determine it. Quite simply: the cost of services will be going up 8% with absolutely NO benefit to the companies involved......In fact, you could say that it will negatively impact all businesses due to the software upgrades that will need to be purchased and installed.......

BTW: I am 99.9% sure Nokia would be paying the GST then applying for a refund but even then, Nokia has offices in Canada so they are a registered Canadian Company and as such, are subject to GST.

[Tangwhich]

BONG wrong......the non-resident pays the GST then applies for a refund after he returns home.

ALL BUSINESSES IN CANADA ARE REQUIRED TO COLLECT GST AT POS.....

That's only if they purchase the item IN Canada. If you're selling to a non resident via mail, the vendor does not collect GST.

[tboy]

That's only if they purchase the item IN Canada. If you're selling to a non resident via mail, the vendor does not collect GST.

That's true, but we're talking more along the lines of an exporting company, not a private over the net sale like ebay or whathaveyou.....

But, now that you mention it, (and someone more knowledgable than I can comment) but I believe the tax is supposed to be collected at the point of sale. In other words, with net sales, the sale actually occurs wherever the business is located, NOT where the end user is.

On that note: I guess we can no longer escape paying the PST when we order from NCIX in Alberta (or other provinces for that matter)........

[Rockslinger]

I guess we can no longer escape paying the PST when we order from NCIX in Alberta (or other provinces for that matter)........

I should speak to our company accountant but I think when we import stuff from the U.S. it goes to a bonded warehouse and the stuff is only released when we pay the 5% GST (guess this will be 13% under the new HST) and customs duties (if any). I don't remember offhand how we pay the PST, we probably self-assess the PST when we file the monthly PST return.

[tboy]

I should speak to our company accountant but I think when we import stuff from the U.S. it goes to a bonded warehouse and the stuff is only released when we pay the 5% GST (guess this will be 13% under the new HST) and customs duties (if any). I don't remember offhand how we pay the PST, we probably self-assess the PST when we file the monthly PST return.

Yes, that is how it will affect you now. Instead of paying the gst only on those taxable goods, you'll be paying the HST.

You don't pay the PST on anything you sell to an end user. A reseller only collects PST on goods sold........Your company would pay PST on office equipment, consummables, anything it purchases for its own use.....

[fred Zed]

Ontario's controversial harmonized sales tax is "virtually revenue neutral" and not the cash grab critics say it is...........
http://www.thestar.com/news/ontario/hst/article/738403--hst-won-t-hurt-much-report-says

[tboy]

The thing I find the most interesting about that article is that they say the increase in sale tax will be offset by tax credits but how many times have we heard that? And then the tax credits are negated by a more complicated tax form......even then, will someone spent 8% for a service now, then HOPE to get that money back 12+ months later?

I say a resounding NO......

Also, it doesn't say HOW this companies are going to save all this money and how that money is going to create jobs.....

[Anynym]

Ontario's controversial harmonized sales tax is "virtually revenue neutral" and not the cash grab critics say it is...........
http://www.thestar.com/news/ontario/hst/article/738403--hst-won-t-hurt-much-report-says

I've got some land in Florida for sale.

The article admits that the HST itself is a huge tax grab, but that Big Brother is trying to offset that tax grab by taking your money and putting it in other peoples' pockets with limited tax cuts and rebates.

Except that the rebates are based on what you earned last year, not next year when you're paying more.

As for the Export discussion above: GST is not to be collected on items which are delivered (shipped by the vendor) out of the country, and PST is not collected on items delivered out of the Province.

[tboy]

My business and similar businesses are not PST exempt (construction contracting) NOW AS WE SPEAK, so after the implementation of the HST, the PST that used to be incorporated in our cost, will flow thru and no longer be a cost.

(We are not a retailer nor do we sell products for resale but if we order concrete to do a job, that PST gets buried in our cost)

Well, I don't want to tell you your business, but if you purchase concrete and pay pst on it, and then sell that concrete to a customer, then you shouldn't be paying PST on that concrete because even though the sale of the concrete is part of the bigger job, it is still a resale situation.

That is no different than me buying 2 x 4's from Home Depot for a job. If I include materials in my price to the customer, I MUST charge them PST. This is why I do "time and materials" with materials being a direct passthrough to the customer....

[Anynym]

Well, I don't want to tell you your business, but if you purchase concrete and pay pst on it, and then sell that concrete to a customer, then you shouldn't be paying PST on that concrete because even though the sale of the concrete is part of the bigger job, it is still a resale situation.

No.

http://www.rev.gov.on.ca/en/guides/rst/901.html

The section you want to refer to is called "Real Property Contractors". They pay PST on the concrete, but embed the cost of that PST into their invoiced rate, and do not charge PST on the concrete to their customers.

And unless the Government does a good job advertising the facts, watch out for the construction industry to give themselves an 8% rate hike next July 1.

T&M billing is fine for many purposes when it comes to Ontario Retail Sales Tax, but not when those materials become attached to Real Property. Consult a tax expert for proper advice. (Note that the Land Transfer Tax takes the place of much of the retail sales tax for wholesale purchase of real property.)

[tboy]

Thanks for the clarification guys...the "attached to real property" always confused me which is why years ago I decided to do the straight pass through method.

The situation that brought this up way back when was "is a custom kitchen cabinet which is permanantly mounted to the walls of a home" defined as "attached to real property". A cabinet shop I worked at said "no" and charged PST on the item and an accountant said "yes" and stated that PST shouldn't be charged......

This also was brought up when I worked for a company that built trade show exhibits. Our Controller called the local taxation office and every time he called, he got a different answer about charging PST on the exhibits we produced. So, we charged PST to COA (cover our ass).

That's the thing: when you make the system so complicated that even government employees don't know WTF is going on, something is wrong with the system.....

[Mencken]

Reduce prices? How? How on earth can anyone with any imagination think that by adding an additional tax on something will that REDUCE a price?

Sure you could argue that tax calculation will be simpler but do you think that all these companies will realize so much time saving that they could lay off 50% of their accounting staff? LOL not. It is simply changing the percentage point in their software. The rest is automatic.....

This is nothing short of a cash grab by the government. Plain simple and any politician supporting this ought to be ousted IMMEDIATELY. I mean, do you seriously think they will be laying off thousands and thousands of employees? (which is what they say will happen once the provinces don't have to collect PST separately).........

Here's an example - a theoretical one.

I manufacture a sheet of plastic, and have costs of $1 for materials. I pay my 7% sales tax on those (7 cents). I then sell the sheet for $1.50. My customer pays 10.5 cents in sales tax. The customer assembles these sheets into a component for another product and sells that for $2. That customer pays 14 cents sales tax. And on and on.

So the total sales tax from all these transactions can add up to a lot of dollars...and it is paid at each step of the way. With the value added nature of the HST it would be as follows:

First $1.50 sale - value added is 50 cents, net tax 3.5 cents versus 10.5 cents under current system

Second sale $2 - value added again 50 cents, net tax 3.5 cents versus 14 cents under current system.

So you can see where this adds up when there are multiple layers of addition of value (even with just manufacturing, wholesale, and retail).

The GST is already that type of tax, harmonizing with the PST reduces administration and clearly will result in much much lower cost of tax that will ultimately be embedded in some products.

Added tax on services and things not formerly subject to PST will offset a bit of that, but not nearly all of it. But over time this will favor Ontario in a huge way as it is a manufacturing province, and this will lower the costs of manufacturing here ...and hopefully this gets passed on to consumers at some time. Competition ensures that happens.

[tboy]

Menck: are you talking per or post HST?

If you're talking pre, no one should be paying PST on the sheet of plastic along the supply chain, only the end user.

The attached to real property discussed earlier is one exception but from my days building trade show exhibits, and purchasing thousands of different materials (from A/V equipment to sheets of plywood) we were PST exempt all along the way........least according to our controller/accountant.

[Anynym]

The attached to real property discussed earlier is one exception but from my days building trade show exhibits, and purchasing thousands of different materials (from A/V equipment to sheets of plywood) we were PST exempt all along the way........least according to our controller/accountant.

You may want to get another accountant's opinion, or have the one you have sign for any financial penalties which may apply.
http://www.rev.gov.on.ca/en/interp/rst/lr0010.html

As the source materials are being manufactured into goods for retail sale (i.e. your product is subject to PST), I would expect you'd be eligible for filing a PEC with your suppliers (i.e. not pay PST on the source materials).

[tboy]

You may want to get another accountant's opinion, or have the one you have sign for any financial penalties which may apply.
http://www.rev.gov.on.ca/en/interp/rst/lr0010.html

As the source materials are being manufactured into goods for retail sale (i.e. your product is subject to PST), I would expect you'd be eligible for filing a PEC with your suppliers (i.e. not pay PST on the source materials).

Thanks for the link but we knew all that. And yes, the point about materials being used in the construction of the exhibit is RST exempt and we had the certificate for just that purpose.

One of the trick aspects of this is: construction and delivery of an exhibit, to a customer based in Ontario, but they take first delivery of it in the US. LOL. We did that many times and never really did figure it out.

[tool_man05]

Finance Minister Duncan said that income tax cuts are coming on January 1st and people making less than $80,000 will be getting a $1,000 rebate cheque to mitigate the HST.

Whoopie! $1000 bucks to offset a TAX on EVERYTHING you buy til at least 2015. Sounds like a deal to me.......NOT!!!!!

[Cassini]

Well, I don't want to tell you your business, but if you purchase concrete and pay pst on it, and then sell that concrete to a customer, then you shouldn't be paying PST on that concrete because even though the sale of the concrete is part of the bigger job, it is still a resale situation.

That is no different than me buying 2 x 4's from Home Depot for a job. If I include materials in my price to the customer, I MUST charge them PST. This is why I do "time and materials" with materials being a direct passthrough to the customer....

The rules on PST are quite clear. If you purchase something and pay PST, and then resell it to a customer, YOU STILL HAVE TO CHARGE PST!!!

You cannot deduct PST paid from PST charges. These rules are messed up and everyone knows it. I even called the PST people on some points, and they admitted that the revised, clarified, clarifications were still confusing and difficult to implement.

I really look forward to the HST. With HST, if you purchase something and pay HST, then you can deduct the expense when you sell it. The cost of the tax is revenue neutral to the business. It makes sense!

[Rockslinger]

The cost of the tax is revenue neutral to the business. It makes sense!

That is what our $1,000 an hour accountant tells us. We pay the HST when we buy our goods and services but we claim a refund back from Ottawa. Sounds simple enough to us.

BTW We asked our accountant why he charges a $1,000 an hour. He said a lot of that goes to pay his liability insurance in case he gave us the wrong advice:(.

[Anynym]

Thanks for the link but we knew all that. And yes, the point about materials being used in the construction of the exhibit is RST exempt and we had the certificate for just that purpose.

One of the trick aspects of this is: construction and delivery of an exhibit, to a customer based in Ontario, but they take first delivery of it in the US. LOL. We did that many times and never really did figure it out.

Since you are exporting the finished goods, yes, you would not charge PST. But if your customer is importing the goods into Ontario and not paying sales tax (self-declared, on all imported goods) they could be subject to prosecution and penalties, putting them out of business.

And that sort of illegal tax evasion (in the scenario outlined) costs all taxpayers.

[tboy]

Since you are exporting the finished goods, yes, you would not charge PST. But if your customer is importing the goods into Ontario and not paying sales tax (self-declared, on all imported goods) they could be subject to prosecution and penalties, putting them out of business.

And that sort of illegal tax evasion (in the scenario outlined) costs all taxpayers.

Exactly. Which is why we (almost continuously) got into disagreements with our customers when they checked with their accounting people and their accounting people said "since you're taking delivery of the item out of country no pst is applicable". They never could understand that while the physical initial delivery was out of country, it was really sold to them in Canada and would come back here to be stored and prepped for the next show. In effect, since their final payment was received by us before it left the loading dock, they really took "ownership" of the exhibit here in Canada.

This was one of the questions that our controller called RevCan about and on 3 occasions, got different answers....

[guelph]

The PST was exempt previously (by companies filing a PST Exemption Certificate with their suppliers, or getting the PST refunded), for any business larger than a Hobby.

.


This is not correct the end user paid PST on goods. I goods were bought for resale then they were exempt, but if a business bought something to use in the business -- office supplies, furniture, computers, cars, trucks etc

They paid the PST making it more expensive to do business

Under HST businesses will be getting a refund of the taxes paid on these item through input tax credits

[Cobra Enorme]

hst doesnt mean shit of a difference. take off your foil hats.