With the new HST in place, Ontario consumers should see a benefit to having the Harmonized Sales Tax by the year 2013. The benefits the HST would bring include tax credits and energy rebates, according to Ministry of Finance documents. Information also suggests that the HST would not cost Ontario households by its originally forecasted $385 million last June as instead it would be projected savings of $490 million to consumers in 2013. The HST has already brought forth a 10% bill rebate on electricity which is expected to be in place till 2016. 68% of Ontario taxpayers, people earning up to $90,000 a year, should see a net savings in 2013. That's increased compared to the 49% who would benefit from the HST in the 3rd year before tax credits get enhanced. However, 32% of Ontarians, earning more than $90,000, should be paying more in taxes in 2013. Even though there's a strong opposition towards the HST, it helps make businesses more competitive, eventually benefiting consumers.
The Ontario Government had chosen to introduce the HST to offset further spending of the government and to potentially benefit consumers. However with that in mind, government spending would go up with each passing year, which wouldn't benefit consumers much at all. Based on Wagner's theory, it seems that the Ontario Government holds the theory true. In general, government services are able to lead to increased costs and government spending. This may have been due to the recession back in 2008 which put the economy on hold, however we're in 2011 and several people are still feeling the effects. There are several provinces that need to borrow money, which could also mean that the Ontario Government wants to try to have a protection blanket from getting into the red. And finally, due to the increased in spending, this lead to the creation of the HST, which would increase tax revenue the government is receiving.
I personally agree that it's not possible to pass on such an amount of savings in the next couple of years to consumers. Even based on spending expeditures, it's not possible to see much benefit to many consumers. Sure consumers will be able to pay less in terms of income tax, however that's only for a certain range of incomes. It's predictable that incomes of over $60,000 could be taxed more heavily than anticipated. There are still a number of people in that tax bracket that could potentially discourage consumers to work harder to get promoted or even a bonus due to taxing of incomes. And the regular spending of consumers on several items depends on their habits. There were certain things that weren't taxed, suich as physical-involved activities such as gym membership. Now that there's a 13% hike on that just due to tax, it could discourage consumers to live a more healthier lifestyle. Now while several items won't be affected, the government needs to take a look at just the simple things, such as keeping a nation healthy, before having a tax hike on items.
Source - http://www.cbc.ca/canada/toronto/story/2011/01/20/ontario-hst.html
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ReplyDeleteA lot of people consider the HST to be the Hated Sales Tax, but I personally don't hate it very much. As long as the government is using the tax money for providing the community with services and programs, then I'm fine with paying the HST. It's good to hear that Ontarians will actually be receiving a net saving from HST credits and rebates within a few years. But going with your point, I don't know how the government would possibly find the money to pass onto consumers.
ReplyDeleteI think that the government is using the HST as an immediate tax relief, and as you mentioned, benefits will be apparent in the future.