Sales tax increase takes effect May 1

Book that holiday now as HST bite begins

April 29, 2010

Robert Benzie

{{GA_Article.Images.Alttext$}}With the transition toward the harmonized sales tax starting Saturday, Ontarians should brace for levies on numerous goods and services to rise to 13 per cent, including flights within Canada.


Book soon and “beat the tax.”

That’s the advice of Revenue Minister John Wilkinson to anyone making recreational plans for the summer.

“Flights within Canada, services like gym memberships, landscaping and … theatre tickets” will be cheaper if purchased Thursday or Friday, Wilkinson told the Star.

With the transition toward the harmonized sales tax starting Saturday, Ontarians should brace for levies on numerous goods and services to rise from either 5 per cent or 8 per cent to 13 per cent.

But Wilkinson said Wednesday that consumers – most of whom are receiving “transition” cheques of up to $1,000 per family starting in June—could get a tax break on many things by shopping early.

“Some businesses are having ‘beat the tax sales.’ The rules are very clear,” the minister said, referring to the transition regimen announced last Oct. 15 to relatively little fanfare. There was no further announcement from the provincial government.

Because of the lack of media coverage on the phase-in, many Ontarians are likely unaware that as of Saturday, they will begin being charged the full 13 per cent HST on anything to be used after July 1.

That means, for example, that a flight from Toronto to Vancouver booked within the next two days for travel anytime after Canada Day would be taxed at a lower rate than one purchased this weekend or later.

Theatre tickets bought after this Saturday for an August performance of, say, As You Like It at the Stratford Shakespeare Festival would be more expensive than those picked up beforehand.

The same goes for one-year gym memberships – as of May 1, the HST will be charged on any portion billed after July 1 – and contracts for services such as landscaping.

First announced in March 2009, the 8 per cent provincial sales tax is being blended with the 5 per cent federal GST into a streamlined, business-friendly HST.

“There’s no business in Ontario where their cost of doing business isn’t going down on July 1,” declared Wilkinson, citing a TD Bank study predicting 85 per cent of the savings incurred by business should trickle down to consumers within the first year.

Still, harmonization will hike taxes on one in six consumer items with the biggest HST wallop coming on energy prices.

Electricity rates, gasoline, diesel, and home heating fuels are expected to jump in price this summer.

Also being taxed at a higher rate – dry cleaning, home internet, taxi fares, camp site fees, home renovations, service calls by electricians, plumbers, and carpenters, private vehicle sales, legal fees and real estate commissions.

Self-improvement will get more costly – taxes are going up on hair styling and esthetician services, massage therapy, vitamins, fitness trainers, sports registration and golf green fees, and hockey rink and hall rental charges.

Even the dearly departed won’t be able to escape as funeral services will be taxed at 13 per cent up from just 5 per cent.

Exempted from the HST are newspapers, books, coffee and fast-food value meals, feminine hygiene products, diapers, children’s clothes and booster seats.

But it should get cheaper to go to the movies and to see professional sports games because the current 15 per cent tax on those events – a special 10 per cent PST plus the 5 per cent GST – will be reduced to 13 per cent.

The tobacco industry, meanwhile, is warning that increased levies on cigarettes will just stoke the booming contraband market.

Currently, a carton of 200 cigarettes that costs around $70 is subject to $24.70 in provincial tobacco tax, $17 in federal excise tax plus the 5 per cent GST.

An additional 8 per cent will be slapped onto that as the GST evolves into the HST and Imperial Tobacco’s Eric Gagnon said that’s bad news for everyone.

“There’s a tipping point – how much is too much,” said Gagnon, pointing out half of the cigarettes now smoked in Ontario are contraband.

The bootleg cigarettes, manufactured on First Nations reserves, sell for as little as $10 for a bag of 200 and no tax is collected and children and teens can easily obtain them.

“With the HST hitting, that spread between the legal and the illegal is going to increase further,” said Gagnon.

“You’re driving more people to the contraband market. Organized crime and illegal traffickers are not going to be charging the HST.”

Book now and save

The two-month transition period to implementation of the 13-per-cent harmonized sales tax begins Saturday.

Consumers making advance purchases of the following goods and services Thursday and Friday will only pay the 5 per cent GST.

After Saturday, the full 13-per-cent blended tax will apply for anything being used after July 1.

Domestic airline tickets (there is no GST charged on international tickets, so there will be no HST applied on flights abroad);

Rail and bus travel;

Gym memberships ;

Theatre and ballet tickets;

Landscaping and other regular maintenance services.

Even after Saturday, Ontarians can, until July 1, beat the HST by advance purchases of the following items:

Magazine subscriptions;

Pre-paid Funerals;

Domestic flights, rail and bus if the trip begins by June 30 and continues into the official HST period.


3 thoughts on “Sales tax increase takes effect May 1

  1. votejohnrichardson Post author

    The Premier admits that the HST will be a hardship for families – will hit the family budget.

    There is no question that Canadians already pay substantial taxes. We need accountability from our governments who are often negligent with our hard earned money. All candidates for Mayor and City Council must be evaluated with regard (in part) to how well they will help us get value for our dollars.

    Question: Would you want Dalton McGuinty to be Mayor of Toronto? You may recall his promise to not raise taxes. The HST is a brutal assault on the budgets of hard working, honest residents of Ontario.–hst-will-hit-family-budget-mcguinty-admits?bn=1

  2. Pingback: Layton and the NDP endorse Patalonee | Vote John Richardson – Independent Judgment For Toronto Danforth – Ward 29!

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