How did the McGuinty Liberals change the sales tax system?
On July 1, 2010, the McGuinty Liberals brought in the harmonized sales tax (HST), which blended the GST and the PST. The tax is set at 13% – 5% for the GST and 8% for the PST.

What’s going to change?
There were a long list of goods and services that were subject to the GST but were exempt from the PST. For example, before July 1st Ontarians paid GST on gas at the pump and the home heating bill but not PST.

On July 1st, 2010, the 8% HST was applied to those previously-exempted goods and services.

See the list of goods and services that used to be charged 5% that are now charged 13% here

Who loses?
The HST costs you more – it makes everything more expensive, from the basics (gas at the pump or home heating) to the little extras in life (hairstylist, gym membership, theatre).

According to our study using Statistics Canada’s economic model, the HST will cost the average Ontario family about $800 more every year.In gas and home utilities alone, the 8% tax hike costs the average household more than $300 a year. Those costs shoot up with major decisions like buying or selling a home or paying for a loved-ones funeral.

Won’t my family come out ahead thanks to the government compensation?
Families lose even when the government’s so-called compensation is taken into account as studies have shown. The average household will pay $800 more and get $322 in tax cuts and credits – leaving families $470 behind every year.

The cornerstone of the McGuinty Liberal compensation package is a one-time cheque. The HST is a permanent sales tax increase, one that is felt by Ontarians day-after-day, year-after-year at the pump, or when paying the monthly utility or internet bills, taking the Greyhound, going to the gym, or sending a child to summer camp.

Cynically, the McGuinty Liberals think they can hide a permanent tax increase with a one-time taxpayer funded bribe. Join us and prove they’re wrong.

Why do this?
While everyday Ontarians have to pay higher sales taxes, businesses receive billions of dollars in refunds for the sales taxes they pay. On top of that, the McGuinty government is giving away $2 billion a year in corporate tax cuts.

New Democrats think that money would help our economy more if it stays with the people who make our economy work. Corporate income tax cuts reward companies that are already profitable - like Scotiabank, which recently posted a quarterly profit of $872 million and paid their CEO $7.5 million last year. That’s good news for Scotiabank – but it’s not a good reason to give them a tax break.

The businesses that don’t benefit from McGuinty’s corporate tax giveaways are those that are losing money, laying off workers, cutting hours, or slashing salaries and benefits. In other words, the very businesses that need some help to get back on track are the ones ignored by the McGuinty Liberals’ wrongheaded tax plan.

Won’t businesses pass on their savings through lower prices?
So far, the evidence suggests that’s not the case. Gas and hydro companies haven’t passed on any of their savings to consumers – gas is 8% more expensive than the day before the tax was introduced, and so is keeping the lights on.

While it’s possible that businesses in certain sectors will pass on some of their savings over time, everyday consumers will bear the brunt of the higher sales tax. Using Statistics Canada’s economic model we found that even if business passes on every penny they save people pay $600 more every year.

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Does McGuinty’s tax plan mean a tax cut for 93% of Ontarians?
McGuinty Liberals are quick to point to the number of Ontarians receiving an income tax cut from his plan. That figure is factually correct but remarkably misleading. For most families, the income tax changes have not come close to offsetting the costs of higher sales taxes. After all, we’re talking about 8% on everything from gas at the pump to the morning coffee, and it adds up quickly.

For every dollar the HST costs Ontario families, only 20 cents go to income tax cuts while $1.03 goes to business tax cuts. People lose with the HST.

Wasn’t harmonization a success on the east coast?
Businesses pushing sales tax harmonization point to lower prices in the Atlantic provinces after harmonization. But what they aren't saying is that for Nova Scotia, New Brunswick and Newfoundland, sales tax harmonization meant an actual decline in the sales tax rate. For example, sales tax harmonization in Newfoundland led to a 4% sales tax rate reduction.

The move also didn't create jobs either. Who benefits from this thing, anyways?

According to University of New Brunswick economists David Murrell and Weiqiu Yu:

“The three participating provinces had the highest sales tax rates in the country, and reducing those high tax rates to 8 percent (along with changing the tax bases) ended up benefiting consumers. But sales tax rates in Quebec, Ontario, and in the western provinces are clearly lower than the old PST rates in the participating provinces. It might have been the case that in the other provinces consumers would lose…”

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Don’t we need corporate tax cuts to stay competitive?
There’s more to a healthy economy than low taxes. Before we invest more of our hard-earned money into tax breaks for business we need to consider other measures that can create and sustain jobs. Public health care eliminates the need of providing expensive health insurance to employees. Good roads help transport goods more efficiently. A high quality education system is critical to a skilled and productive workforce. Most importantly, what can we do to help the people who make the economy work?

Ontario businesses already pay significantly lower taxes than our nearest competitors in the US. In fact Canada’s effective corporate tax rate is lower than that of the US, Japan, France, Korea, Brazil and India. From 1999 to today, the Progressive Conservative and Liberal governments have provided over $25 billion in corporate tax cuts. That astonishing high figure casts a lot of doubt on the claim that lower corporate taxes trigger job creation and economic growth. After all, in exchange for $25 billion in taxpayer-funded assistance, Ontarians haven’t seen the job gains or economic growth they were promised.

Meanwhile, consumer confidence is shaky. The Conference Board of Canada estimates that Ontario’s consumer confidence is down nearly 20 per cent since 2007. A new tax doesn’t make Ontario families feel any better about making new purchases.

Is the tax going to be revenue neutral?
The HST is revenue neutral to the government but not for people. Consumers pay $5.9 billion in new sales taxes under the HST scheme and businesses pay about $4 billion less. Profitable corporations receive another $2 billion a year in a no-strings-attached corporate tax cut.

Don't all sorts of people support this tax?
Polls show as much as 70% of Ontarians are against the tax and many organizations oppose it as well.

For example, nearly sixty per cent of small businesses couldn't think of a single benefit of the HST. Retired groups like the Canadian Association of Retired Persons and the Police Pensioners Association of Ontario oppose it. Business groups and recreational organizations are worried about it as well.

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