The PST, GST, HST Dilemma

I have been meaning to have a few things to say about the move to bring in HST in Ontario for a while now but have been trying to find out EXACTY what will and what not be affected by this proposed change. If you too are confused by this whole thing then welcome to the club. There seems to be no documents listing what items will be taxed at the new rate of 13% and what items or services will be exempt, its hard enough to decide what is currently taxed with either PST and / or GST!
Please excuse the long post it simply cannot be fully examined in less space.

I will give a couple of examples of where my confusion comes from. Recently our MPP here in Grey Bruce, Bill Murdoch, has been vocal in his condemnation of this move (a position with which I fully agree) and in a letter to the editor of our local newspaper said:-
“The HST is bad news for the average Ontarian. Many PST exempt items are now going to be taxed and as more people learn about what is going to increase in price by 8 percent, the more emails and calls my office will receive from irate constituents. Lately, my office has been receiving calls concerning the fact the HST is going to be charged on rent. That means rent is going up by 8%, even with rent control. If you are paying $600 a month for an apartment, as of July 1, 2010 you are going to see your rent jump by $48 a month due to the HST. “

Upon checking the Canada Revenue Agency web site on GST / HST however I found this:-
1. A rental of a residential complex or a residential unit in a residential complex is exempt if the complex or unit is to be used by an individual as a place of residence or lodging and if the rental period is a period of continuous occupancy or right of occupancy of one month or more to the same individual.

That would SEEM to indicate that rent is exempt from GST, but then who realy knows, is Bill right or is it all “to be decided”?

He goes on to say “The problem with harmonization is simple, the PST exemptions are gone on almost every item it was previously on, essential items we use daily. Now your rent, your gas, your haircut and even your Tim Horton's coffee are going to increase by 8%.”

That would seem to be accurate, certainly our Phone and Hydro bills are currently only taxed by GST and so presumably would see an increase in tax burden and we must assume that most items that are now subject to GST will not be exempt from the HST. But what of items and services currently GST exempt (or “0% rated) that PST is charged upon? One such item is your house and car insurance, my bills show a charge for PST but not for GST, it would seem at first glance that we may just gain on that one. Which way will these items go, no one knows for sure it would seem, apparently even the proposed legislation is unclear on many of the details. Another such item is the little known exemption for self employed people who gross less than $30,000 a year who do not have to collect GST, will the miniscule advantage these folks, who can ill afford any reduction in income, have this slight break removed. Who knows!

In an effort to find out some of the answers I searched the internet for information, whilst I found no lists regarding the changes to Ontario tax, I did find this on the recent changes to BC tax which may (or may not) have some bearing upon the changes proposed here.

GOODS subject to BC Harmonized Sales Tax - Energy conservation equipment, smoke detectors and fire extinguishers, work related safety equipment basic cable TV and residential phones, non-prescription medication, vitamins and dietary supplements, residential fules (electricity, natural gas) and heating, all food products (only basic grociers will remain exempt from BC HST), safety helmets, life jackets, first aid kits, magazines and newspapers.

SERVICES subject to the new B.C. HST - Airline fares within Canada, Funeral services, Real estate fees, Membership fees for health clubs, dry cleaning, personal services such as hair care, Movie and theatre tickets, Professional services such as accounting and home care, Repair services for household appliances, and Household maintenance such as renovations and painting.

GOODS and SERVICES that are exempt from the B.C. Harmonized Sales Tax of 12% - These include fuel including gas, diesel. Also, children’s items including books, clothing, footwear, car seats, booster seats, diapers and feminine hygiene products are exempt from the 12% BC HST tax.

The CRA has a list generalities regarding GST / HST but one must view numerous pages to see the details. For more detail on what is and is not GST taxable see the CRA web site, it is unclear whether the proposed ONTARIO HST will have additional exemptions or inclusions. However here is a list of most of the exempt items currently listed, it must be presumed that most everything else is taxed!!

Goods and services taxable at 0% include:
· basic groceries such as milk, bread, and vegetables.;
· agricultural products such as grain, raw wool, and dried tobacco leaves. (??)
· most farm livestock.
· most fishery products such as fish for human consumption.
· prescription drugs and drug-dispensing fees.
· medical devices such as hearing aids and artificial teeth.

Exempt goods and services include:
· used residential housing.
· long-term residential accommodation (of one month or more), and residential condominium fees.
· some sales of vacant land or farmland..
· most health, medical, and dental services performed by licensed physicians or dentists for medical reasons.
· child-care services (day-care services for less than 24 hours a day) for children 14 years old and younger.
· bridge, road, and ferry tolls legal aid services.
· many educational services such as: courses from a vocational school that lead to a certificate or a diploma to practise a trade or a vocation; or tutoring services for an individual who takes a course approved for credit by a school authority
· music lessons.
· most services provided by financial institutions such as arrangements for a loan or mortgage
· arranging for and issuing insurance policies by insurance companies, agents, and brokers.
· most goods and services provided by charities.
· certain goods and services provided by non-profit organizations, governments, and other public service bodies, such as municipal transit services and standard residential services such as water distribution.

If we then look at what is now PST exempt we MAY get an idea of how much of a tax grab this actualy is (or will be). If you can figure it all out please let me know, it seems to me that we are screwed not matter what!!

For Retail Sales Tax (RST) purposes, all goods are taxable unless the purchaser is entitled to an exemption, and all services are non-taxable unless specifically taxed under the Retail Sales Tax Act. The lists below provide some examples of taxable and non-taxable goods and services in Ontario.

Common goods that are not taxable:-
basic groceries, food products (except for candies, confections, snack foods and soft drinks)
prepared foods sold by an eating establishment for $4 or less
children's clothing (including diapers) , footwear costing $30 or less
feminine hygiene products , newspapers
drugs and medicine sold under a doctor's prescription
goods designed solely for people with physical disabilities
vitamins and minerals.

Taxable services:-
telecommunication services (telephone, cable, pay television)
accommodation for less than one month (hotels, motels, bed and breakfasts)
labour provided to install, repair or maintain tangible personal property
labour provided to install, configure, modify or upgrade a computer program
contracts for the service, maintenance or warranty of goods, including computer programs

Non-taxable services (examples):-
dry cleaning ,carpet and upholstery cleaning
personal services, such as hair styling, barbering, and beauty treatments
medical and health services ,veterinary care
car washing and engine shampooing
labour to install or repair real property or fixtures.

The Canadian Taxpayers federation has this to say:-
“The economy is still struggling; people are worried about their jobs and are spending less. Now is the wrong time to add 8% to the costs of gasoline; diesel; propane; home heating fuel; home electricity; natural gas; home TV service; home internet service; home phone service; cell phone charges; hair cuts; lawyers’ fees; accountants fees’; mechanics’ fees; ballet lessons; rink rental fees; tailoring; magazine subscriptions; mutual fund fees; massage; chiropractic; audiology; train fares; plane fares; taxi fares; bus fares; vitamins; dry-cleaning; grass cutting; snow removal; camping fees; firewood; meals under $4; new homes over $500,000; gym fees; home renovation labour; and real Christmas trees.”


One final note here, our federal government is trying to spin this as an entirely Provincial initiative however if that were so why would the Federal government promise $4.3-billion to help Ontario adjust to the tax change, and give British Columbia $1.6-billion to “assist” with their change. They have also offered to cut the remaining holdout provinces a cheque to ease the transition if they agreed to harmonize the taxes. The question has to be asked “what’s in it for them”, I find it hard to believe its simply just to make them look good as that FEDERAL HST rebate / bribe cheque arrives on your doorstep.

With so many folk out of work and many of them unlikely to find work any time in the foreseeable future and with so many families already struggling to pay for the necessities, it hardly seems like a good move either politically or economically to do this. But then who am I to judge, I’m just one of those on the shitty end of the stick!

Another hit for Rural Services?

A few weeks ago I posted a rant about the bizarre and often illogical demands by unnamed Postal workers for the relocation of many rural mail boxes in which I said :-“There is a strong possibility that this is just the thin end of the wedge, rural mail delivery will become a thing of the past, instead of one vehicle traveling a daily route with your mail we will have hundreds of folks driving down the road to get their mail from those “community” mailboxes, or even worse in to town to the post office to get our mail.”

It seems that I may well have been correct on that one, I did not know at the time that recommendations to lift the moratorium on rural post office closures had already be made. The Canada Post Corporation Strategic Review as presented Dec 2008 say this in its Executive Summary :-

“A review of the moratorium on rural post office closures is overdue. A new and more explicit mechanism should be developed to replace the moratorium with a clear set of rules and procedural guidelines that would both safeguard and respect the postal service needs of rural Canada but also allow Canada Post a degree of flexibility to deal with emergent issues in providing postal services in rural areas while respecting the service needs and expectations of rural Canadians.”

That sounds like typical double speak for lets close some rural post offices to me! I find it interesting that I can find no mention of the Senate report BEYOND FREEFALL: HALTING RURAL POVERTY – (available in PDF format here) wherein “The committee recommends that the federal government work with provincial, territorial and municipal governments to identify ways in which a range of existing and new services might be delivered through existing rural infrastructure points such as rural post offices.

They then go on to say:-


“Mail delivery to the end-of-lane – basically to a roadside box at the end of a property owner’s lane or driveway – has its origins at the turn of the 20th century. In many areas, these houses were once on quiet country roads. Now, these same residences are directly adjacent to relatively busy streets and highways, where there is a serious and likely potential for accidents and injury both to the people delivering the mail and to passing motorists. The Advisory Panel believes that the safety reviews undertaken by Canada Post were necessary and likely overdue, given the changes in traffic speed and road usage that have evolved over time. The government should permit Canada Post the latitude to give serious consideration to the efficacy and viability of maintaining this mode of mail delivery. “

Now that sounds like double speak for lets do away with rural delivery altogether, and by the way we will provide rural residents with a box at the nearest Post Office which has just been closed!!

This belief is reinforced by their “Recommendations” which says:-

“The government should replace the moratorium on rural post office closings with a new approach founded on a more realistic and practical definition of ‘rural’ and in the context of an updated and more operational rural policy.

The government should declare that the rural post is part of the USO, (Universal Service Obligation) and service expectations for rural Canada should be incorporated into the new Service Charter. “

It looks to me that our “Service Expectations” had best not be too high! I am pleased to hear that some municipalities are raising these issues with the minister at the AMO conference this week but my expectations of any change in attitude towards rural services coming out of those conversations is not high either.

Democracy in the Amphitheatre.

As promised here are my impressions of the presentation sponsored by the OS Greens last Thursday at Kelso Park. This has been cross posted at Democracy Under Fire where you will find further information and opinion about our Parliamentary Democracy and related subjects.
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Recently I had the pleasure of hearing Elizabeth May speak to the subject of government accountability and the demise of our democracy in recent times. It was a pleasure to listen to a leader of a political party, abet one who has yet to be seated in the House of Commons, speak openly about the undemocratic amount of control that political partys and their leaders have upon the workings of our parliament.

It was refreshing to hear a national political figure speak about the need for less power for the PMO and more for the individual MP and thus “the people”. It was perhaps fitting that the venue where she spoke of us reaching a turning point in our democracy was an outdoor amphitheatre reminiscent of the places in Greece where democracy was born.

She spoke of our political system reaching a new low with leaders being attacked by slick campaigns aimed not at policy or proposals, but designed to make our citizens so disgusted with either the attacker or their target that they do not bother to vote. She spoke of regularly sitting in the gallery of the House of Commons during question period and observing the orchestrated heckling and name calling and asked if perhaps the televised portions should have a warning as not suitable for children! Which given the childish behavior of those involved could stop the MPs from viewing their own antics?

Her presentation focused upon the recent decline of cooperation and respect amongst or representatives in Ottawa, she recounted a time not that long ago, when as a aide to the Environment Minister of the day she could recall that even under a majority government cooperation and consensus were the norm and rarely did a bill reach the first reading stage until it had been broadly agreed to by all partys.

There was no rhetoric about the Green Party being the answer to all these things, there was in fact very little “political maneuvering” in her words but simply her opinion of where our democracy stands at the present time, that being “about as low as it can get”. We can but hope that she is correct on that one, something that we will see perhaps change for the better after the next election, coming she believes in November shortly after parliament resumes in the fall.

My impression of Ms May upon hearing her speak to the audience of 200 or so was not of an arrogant “I am the leader” politician that we are so used to hearing, but of a knowledgeable and caring individual who truly is worried about the way in which things are being done by our current government. A person who genuinely believes, as I do, that our very democracy is in jeopardy if some changes are not made in the very near future, and incidentally who still believes that individuals, herself included, can make a difference.

Will her presence in the HoC after November have a massive impact upon the democratic process, hardly. Would the presence of herself and a few more honest and open individuals who are equally concerned about our democratic process be a good place to start, you bet. As she said the only way to change things is to elect individuals who realize that their boss is the people who elect them, if that happens to be “a Green” then that too may be a good thing.

It was interesting that upon returning home and picking up the local newspaper I read that Bill Murdoch, the long time MPP for the riding where she spoke, had in a recent interview said “We don’t have a representative democracy any more, we have a party democracy. As soon as you get elected whatever party you belong to they think they own you………That’s not the way it was meant to be.”

They are both correct, these two are the sort of representatives we need, as Ms May said, the question to ask those candidates during the next election is “for whom do you work”, but remember that SOME will just tell you what you want to hear, or what they have been told to tell you, rather than discuss the possibility that the “party” is the puppet master!

The Municipality of …. Norm Sterling?

“The time has come to embrace municipal party politics as part of a major reform to give greater purpose and direction to Ontario’s major cities, former Conservative cabinet minister Norm Sterling says. “

It would seem that the Ontario PCs are not much different from the federal lot, they all seem to believe that political partisanship equates with “greater purpose and direction” but fail to see that it only holds true if said believers have total control and no regard for the views of others. It is true that in SOME cases “ They each have their own little fiefdoms, and they tend to those fiefdoms. Councillors do not have an interest in the whole, only in their own bailiwick,” but how pray tell is that any different from our Provincial or Federal representatives? How will bringing another layer of opinion and political pressure (quite probably from outside the local area) to municipal decision making improve the process?

Fortunately there are some within the Ontario PCs with more insight than Mr Sterling, MPP Bill Murdoch who invariably puts his constituents first before party politics has come out strongly against this idea. I am not sure how much impact Bill will have upon discussions on this as it seems, as is all too typical with our political partys, he has been previously kicked out for speaking when not agreeing with the party line. Please note that “Sterling says the views he is expressing are his alone, and he has not discussed his vision for change with new Ontario Conservative party leader Tim Hudak. Still, he plans to do so and, at the very least, push his caucus to undertake a review if his party comes to power.” The party has said “This is two MPPs individual opinions, the party has no position on this.”

That all said this sort of idea must be quickly and thoroughly debunked before the idea takes hold. Municipal politics remains one of the few places where citizens have at least some chance of being heard and having an impact upon decisions, the interference of political partys into the process can only make for MORE entrenched positions and less effort at compromise and agreement. Let us at least try and keep party politics out of municipal council chambers because if Provincial and Federal legislatures are any example party politics is increasingly detracting from our democracy not adding to it.

One final note here:- I must recognize, as must any who would consider this proposal, that there is no comparison between (say) Toronto Municipal Council operations and typical rural municipality with 4 or 5 councilors, or for that matter with Mr Murdoch’s home city of Owen Sound’s Council. But even so I cannot see how more “politics” can help even a large city be more efficient and accountable to the citizens for whom they work!

Cross posted at Democracy Under Fire

Elizabeth May in Owen Sound on Thursday.

For those who have not heard about it there is a chance to hear Elizabeth speak about “Making Our Government Accountable” at a public meeting sponsored by the Bruce-Grey-Owen Sound Green Party at the Kelso Park Ampitheatre. Thursday, Aug 6 at Kelso Park, Owen Sound, 7-9PM.

Should be so much better than sitting in a stuffy hall, what a great venue, but remember its outdoor seating so bring a cushion for stone benches or a lawn chair. It will be moved to the Picnic Shelter if rain threatens.

It takes a lot to drag me out of my rural hideaway but I am going to try and attend this one and hope to blog about it all later in the week. Should be great fodder for my blog about Canadian Democracy judging from her recent interview on CKNX. (available on a podcast for a couple more days yet)

Stay tuned!