Food under $4, such as the fries at this chip wagon, will now cost 8 per cent more under the HST ( Photo: Christopher King )
The Ontario Liberal government has proposed a single sales tax for next year — a move New Democrat Party leader Andrea Horwath said will only hurt students.
As outlined on the Ontario government website, the federally administered harmonized sales tax (HST) will combine the goods and services tax (GST) and provincial sales tax (PST) at 13 per cent.
The new tax will take effect July 2010.
For consumers, the tax will affect items such as footwear under $30, prepared food under $4 — a Tim Horton’s medium coffee and a bagel with cream cheese cost $3.02 — tobacco and nicotine replacement therapy, newspapers and magazines, taxis, vitamins, Internet access fees and personal services like haircuts by adding 8 per cent to the tax Ontarians normally expect to pay on these items.
Horwath said when the general population is concerned about “losing good-paying jobs” it is not the time for what the NDP are calling a “tax grab.”
“That’s not the time to whack people with a higher cost for consumer goods,” she said.
“To have to pay 8 per cent more on a significant number of consumer goods is going to hurt students.”
The government has said it will exempt certain items from the new tax, such as books — including textbooks — and feminine hygiene products.
Services like public transit and items such as prescription drugs and rent will remain non-taxed.
Other provinces that are currently practicing HST are Nova Scotia, New Brunswick and Newfoundland, all at 13 per cent.
There will be rebates available to students, as well as other individuals who earn less than $80,000, in three $100 payments in June 2010, December 2010 and June 2011.
However, Alicia Johnston, a spokesperson for Dwight Duncan, Ontario minister of finance, said the tax is designed for “making Ontario more competitive.”
Professor Saud Choudhry, who teaches economics at Trent University in Peterborough, Ont. said if the Liberal government’s predictions to stimulate the economy prove true, everyone will benefit, including students.
He explained that the tax policy is designed to help the business and investment climate in the province.
With the increase in tax, the cost of investment spending for businesses is raised.
By reducing the cost of capital, as the Ontario government hopes to do, the province could see a boost in productivity.
This, Choudhry said, is a major benefit to students who will be joining the workforce in the near future — and may outweigh the pessimism surrounding the immediate increase in the cost of goods and services.
But, he said, there are lots of “ifs” attached to the success of the government’s plan — one being the global economy.
“Unless the global economic environment improves,” he said, “there is little hope for these so-called ‘smart tax policies’ to bring about immediate results.”