Rebate cheques being mailed this week
Robert Benzie Queen's Park Bureau Chief
HST rebate cheques are being mailed out this week, but Ontarians may want to bank some of the money as the new tax will eventually cost households up to $480 a year.
In fact, 51 per cent of Ontario families will pay more in taxes by 2012, according to the Liberal government’s own study on the impact of the business-friendly 13 per cent harmonized sales tax. The tax takes effect July 1.
Speaking to an Ottawa radio station, Premier Dalton McGuinty emphasized that the transition payments of up to $1,000 per household should offset higher levies on gasoline, electricity, and other goods and services.
“We’ve worked really, really hard to minimize the impact of the HST,” McGuinty told CFRA Radio.
“That’s money we’re passing directly to our families through the federal government to help them cope with the HST,” he added, referring to the three installment cheques totalling up to $1,000 being sent out starting Thursday.
Prime Minister Stephen Harper’s Conservative government gave McGuinty’s Liberals $4.3 billion as an incentive to blend the 8 per cent provincial sales tax with the 5 per cent federal GST, hiking tax rates on about one in six services and products.
That money will in turn be distributed to Ontario families with household incomes of less than $160,000 in the form of what Progressive Conservative Leader Tim Hudak derided as “bribe cheques.”
Single Ontarians earning $80,000 or less will receive $300. Three payments – in the form of government cheques or direct deposits into taxpayers’ bank accounts – will come this month, in December, and next June.
But any taxpayer jubilation over the rebates may be tempered by a sobering new 38-page report released Tuesday by the provincial finance ministry, entitled Ontario’s Tax Plan for Jobs and Growth.
Officials found by the third year the HST is in place – 2012 – families with a household income greater than $60,000 will pay more in taxes even though income-tax rates were trimmed as of last Jan. 1.
Revenue Minister John Wilkinson argued the tax system will be “more progressive” because lower-income Ontarians will pay less.
“The people with the most will pay more as a percentage than the people with the least,” Wilkinson said in an interview.
For example, by 2012, a family with a combined annual income of between $20,000 and $30,000 will save $235 a year. Overall, 49 per cent of families will be ahead after the tax is in place and 51 per cent will pay more.
Once the $60,000 income threshold is breached, however, the tax burden escalates steeply:
• Between $60,000 and $70,000, it’s a $45 hit for the 7 per cent of Ontario households in this bracket.
• Between $70,000 and $80,000, it’s $95, affecting 6 per cent of households.
• Between $80,000 and $90,000, it’s $135, also affecting 6 per cent of families.
• Between $90,000 and $100,000, it’s $195, affecting 5 per cent of households.
• Between $100,000 and $125,000, it’s $240, affecting 10 per cent of households.
• Between $125,000 and $150,000, it’s $295, affecting 7 per cent of households.
• Between $150,000 and $300,000, the highest bracket for which figures are available, it’s $480, which affects 10 per cent of earners.
While the government claimed its assumptions are “very conservative,” its calculations are based on businesses passing along to consumers 90 per cent of all savings realized through the streamlined tax by 2012.
(In comparison, the TD Bank, which has refused to say what, if any, service fees it would be cutting as a result of the new measure, estimates 95 per cent of savings would flow through to Ontarians by the third year of the HST.)
NDP Leader Andrea Horwath said the report was “ludicrous.”
“No one believes that businesses will pass on their savings to consumers. If the government’s own business—the LCBO—isn’t going to pass on the savings, why should those in the private sector?” said Horwath.
That’s a reference to revelations in the Star last month that the province’s Liquor Control Board of Ontario quietly increased its mark-up by 7.5 per cent in order to claw back any revenue shortfall from the HST.
“The shifting of taxes off the corporate sector onto the backs of individuals and families is the wrong thing to do,” she said.
Hudak, meanwhile, dismissed the HST as “a greedy tax grab.”
While both he and Horwath rail against it, neither has pledged to repeal it if they become premier after the October 2011 election.
http://www.thestar.com/news/ontario/hst/article/820554--liberals-admit-hst-will-cost-families-up-to-480-a-year?bn=1
I think that the Harmonized Sales Tax (HST) is overall a good thing for the people of Ontario. We just went through a recession last year and are still continuing forth right now. The HST tax will raise the competitiveness and success of Ontario businesses and in doing so, will also help improve the state of our economy. It will provide low-income Canadians with the money they need to recover from the recession or to provide for themselves and their families. It will also take the hidden costs (PST taxes) off consumer items that are charged through each step of manufacturing for products. This will lower prices for consumers and raise the income for businesses. By doing this, we will put Ontario back ‘on the map’. However, the problem arising now is the question of whether Ontario citizens are really saving. The PST taxes will be repaid to business in order for the HST to work, but with the raised tax money of successful families. Those with incomes of over $60,000 and more will have a steady increase in their taxes, depending on exactly how much they make. Although people are raising concerns and doubts over this matter we need to look at the big picture which is rebuilding Ontario as a strong province. Yes, there will be a raise in taxes for those considered wealthy and successful but the poor will be saving money and keeping up with the provinces expectations and standards. As well, if businesses make more money they will be able to compete with other businesses and possibly bring in larger incomes to the province. In all I disagree with Horwath and Hudak. The HST is not “a greedy tax grab” but a clever way to rebuild Ontario. Shifting taxes off corporate escorts will eventually lead to help individuals and families as well as support those with low-incomes. The HST tax promises a bright future for Ontario and its citizens and should most definitely be kept in effect, following July 1rst.
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