What's In, What's Out Under the HST?

About 83 per cent of purchases will see no change in tax when the Harmonized Sales Tax comes into effect on July 1st. This is why:

• No GST now, no HST July 1: there are some items that currently have no sales tax on them, such as basic groceries, municipal transit and prescription drugs. On July 1, 2010, there will be no HST charged on these items.
• Point-of-sale rebates: other products will be eligible for a point-of-sale rebate for the provincial part of the HST. This means you will only pay the five per cent federal portion of the HST. These include print newspapers, books (including audio books), diapers, children's clothing and footwear, children's car seats and booster seats, feminine hygiene products, and qualifying prepared food and beverages sold for $4 or less.
• There's already 13 per cent on some items: cable and phone services, new cars and adult clothing there is already 13 per cent tax (eight per cent PST and five per cent GST). On July 1, there will be one tax, the HST - still at 13 per cent, and collected by the federal government.
  

What About Tax Relief?

A number of personal tax cuts, credits and benefits will help ease the transition to the HST:

• Personal income taxes are being cut for 93 per cent of income tax payers.
• The Ontario Sales Tax Transition Benefit payments are providing up to $1,000 for families (including single parents), or up to $300 for single people.
• The new permanent Ontario Sales Tax Credit will give each member of your family up to $260 a year.

How Does The HST Work?

Currently, PST is applied at every step in the creation of a product. Those PST charges add up, and are embedded in the price you pay at the store and in the cost of products that Ontario exports.

Under the HST, most of those embedded business costs are removed. Savings can be invested or passed on to consumers.

Why is Ontario Doing This Now?

It's simple: it will help grow the economy. The HST, along with tax cuts to small business in particular, will help make Ontario one of the most tax-competitive jurisdictions in the industrialized world.

We need to create incentives for Ontario businesses to grow and for new businesses to locate here. Because that means jobs - creating new jobs and saving existing ones.

The PST system was introduced almost 50 years ago - in 1961. A lot has changed since then. More than 140 countries have already adopted a more competitive value-added tax system similar to the HST. Ontario can't afford to fall behind.

What Do The Experts Say About The HST?

University of Calgary economist Jack Mintz says the HST and other tax changes will create 591,000 net new Ontario jobs over the next 10 years.

The C. D. Howe Institute found that per capita investment rose by more than 11per cent when the Atlantic provinces moved to the HST.
A study by the TD Bank estimates that about 80 per cent of the cost savings to business will be passed on to consumers in the first year the HST comes into effect in Ontario, rising to 95 per cent by the third year.