Thursday, May 27, 2010

Nothing says O Canada like a new tax

On July 1, 2010, the government of Ontario is introducing a new tax because nothing says happy birthday to a nation like imposing a new tax. The HST, the Harmonized Sales Tax, is going to replace the previous two tier provincial and federal sales taxation system with a harmonized model that will make some things a tad less expensive and some other things a tad more expensive. While the new HST will still combine for 13%, which is roughly what we pay now, it's not so much the how much that will change, but what gets taxed.

Things that had not previously been taxed by one of two governments will either be slightly decreased by around 2% and other items will increase from 5% to 13%. Certain essentials, like food, clothing and child services will not be affected, so as to let the poor stay poor and not slide all the way to destitute. Other less essential items which still make up a good portion of goods and services used by the present middle class, will be taxed up to 13% from the previous 5% and this where some of the sliding occurs from middle class to closer to poor than previously thought.

Frivolities such as internet access, drycleaning services, hydro, hairstyling and gas will increase. While these are not considered to be essential to life in the same way that food, water and shelter are, it's pretty difficult to see how the average consumer is going to be able to absorb these extra costs. Most people will not have the option of not owning a vehicle, since the middle class tends to live a little out of the downtown core due to inflated central housing prices. As well, those working in any kind of profession in which they contact the general public will probably not be able to forego haircuts and drycleaning. As for hydro and internet access? We can't exactly eat in the dark and not check our email.

And then there are home renovations and services like snow removal. Wait, didn't the federal government just offer tax benefits for those renovating their homes? Looks like the government keeps to its old tradition of giving with one hand and taking away with the other.

Another interesting fact is that while alcohol will decrease from 15% to 12%, tobacco will increase. Why are we punishing the smokers and not the alcoholics? Don't they both have just as big an impact on our social services and health care? I guess the government figures that smoking is plain evil, whereas alcohol just helps their public servants face another day at work.

And when introducing a new tax, why not ruin two holidays at the same time? While this new tax comes into effect on Canada Day, it will spread its influence straight through to Christmas, when Christmas trees will be taxed up to 15% as well. Ho ho ho, thanks for the extra dough.

Probably the single most maddening thing in this equation is that while inflation has risen roughly 2.2% over the past year, most public servants have seen an increase of 1% on their annual pay. Which means that the hated public servants who always seen to be doing better than the rest of the country, really are not doing THAT much better than the rest of the country.

1% is better than a kick in the teeth, and I guess for those people who didn't even get that, well, they probably see it as such. In the meantime, it's probably a good idea to get your hair cut, get your clothes cleaned, quit smoking and turn off the lights. Those little 'luxuries' will soon cost us more.

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