Canada’s province of Ontario and British Columbia are setting the stages to introduce harmonized sales taxes across the board in their respective provinces. The several next few paragraphs outline the HST.
Ontario plans a major 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 so.
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.
Why is Ontario doing this?
The province says implementation of the single sales tax would bring Ontario into line with “what is viewed as the most efficient form of sales taxation around the world.” The finance ministry says the single sales tax would reduce the cost of goods that Ontario exports, making the province more competitive and boosting a sector of the economy that has been particularly hard hit by the economic downturn.
What are the details and technicalities of this new tax?
This next section is very important and it should be noted to digest the ramifications of the following text.
The retail level for Sales tax is for the provincial domain only under Section 92 of the BNA/Consititution Act of 1867, as it is a direct tax..as is income tax. The Federal government is only supposed to access indirect taxes which are not at the retail level but are duties and excise taxes and so forth under Section 91. However since 1917 the Feds have encroached on the provinces’ turf with the introduction of income tax (direct tax) with the excuse it was to pay for the first war and said it was temporary.
It has never given up this tax despite a 1950 unanimous Supreme Court decision saying they were breaching the terms of Confederation and gave them until 1961 to vacate the income tax (direct tax field). What did they do? they changed the FST which was an indirect tax into a direct tax despite the constitution and the supreme court decision. This was all done under Brian Mulroney’s regime. Now they are going to really muddy the waters by incorporating PST and GST together. This again is not allowed under the 1950 SCC decision.
Going on a slight tangent, and exploring the two previous paragraphs, the income tax was actually ruled illegal and unconstutitional in a case of Klundert vs. Canada. Jack Klundert of Windsor, Ont., has won a court case in which he was charged with refusing to pay about $350,000 in taxes.
Klundert, who says he doesn’t believe the federal government has the constitutional right to collect income tax, was found not guilty of tax evasion. Klundert accumulated a $350,000 tax bill between 1993 and 1998. When it came time to file his taxes he wrote “zero income” on his tax forms, when he in fact he earned about $1.5 million.
Klundert argued that disclosing his earnings to the government would be like “sitting down with thieves” and telling them where his valuables were.
Original source of this proof comes from CBC
Criticism of the HST
Vocal critics, especially in B.C., where the Campbell government has faced a huge backlash, say the merged tax will hurt families because they’ll be paying tax on things that are currently not taxed, including haircuts and restaurant meals.
And mutual fund industry insiders say investors will pay another $500-million a year in fees once the proposed harmonized tax takes effect. There is currently no provincial tax on mutual funds in any province, while the 5-per-cent GST is already applied and included in fees. A move to include funds in a harmonized tax would mean an extra 8 per cent on management fees in Ontario and 7 per cent in British Columbia.
Canada’s small businesses owners also fear a backlash, worried that higher taxes on goods will encourage recession-wary consumers to shut their wallets even tighter.
Criticisms extracted from Globe and mail
HST creates a new wave of protesters
Written by Ted Clarke, Citizen staff
came out to join the protest against the harmonized sales tax being imposed on British Columbians next year.
The 64-year-old logging truck driver says he couldn’t ignore his gut feeling the HST is a bad idea that will increase the cost of living (and dying).
“This is a tax they’re shoving down our throats that we shouldn’t be getting,” said Johnson. “It was never brought up at the election (last year) and I think that’s a big mistake. Now, when you go out to eat, or do anything, you’ll be paying that tax. They knew about it and it’s just straight lying.
“I never said anything or protested anything all my life, but this one really gets you. I voted lots of years for Social Credit and Liberals, but that’s over with now.”
“We have to stop this HST, This is one issue where all of us don’t think this should be happening,” said Hemingway. “People in Northern B.C. are already hurting and I’m very concerned about this HST, in combination with the increase in (health care) premiums, the cuts in other services and the things we haven’t heard about.”
Peter Ewart, a spokesman for Stand Up for the North, says the HST is an extremely unpopular tax that flies in the face of democracy. Ewart expects the post-Olympic provincial deficit will balloon well into the billions of dollars, and has a hard time believing the Campbell government, which denied during the last election it was considering the HST.
“This is an unjust tax, and a violation of democracy that goes against the will of the people,” said Ewart. “The premier of this province promised this tax would not be brought in and two months after the election it was brought in, and that is in defiance with the will of the people of this province. This is a shifting of the burden of the economic crisis away of a small number of very big monopoly corporations and further onto the backs of ordinary people.
Original article found on Prince George Citizen