According to a representative of the Consumers Association of Canada, the Ontario government’s proposed harmonized single-sales tax could not come at a worse time for consumers.
The Liberal government presented a wide range of tax reforms in today’s budget announcement.
Alongside the tax reforms, $32 billion was allocated for infrastructure, $300 million towards the greening of Ontario’s economy and $700 million is to be directed towards business innovation.
But criticism of the budget was swift and wide-ranging. Newly elected NDP leader Andrea Howarth said because of the single sales tax the cost of a morning coffee and donut or filling up the car would rise by eight per cent.
Mel Fruitman, Ontario vice-president of issues for the Consumers Association of Canada was also disturbed by the proposed harmonized sales tax plan.
“Consumers are now going to pay more for everyday items than they did before,” Fruitman said. He mentioned that the harmonized tax would increase the cost of home heating fuel.
The proposed harmonized tax is a joint venture between the provincial and federal government’s. It combines the provincial sales tax and Ottawa’s goods and services tax, lumped into one single figure. This means that consumers will see one single line item of 13 per cent on their purchase receipts.
According to Minister of Finance Dwight Duncan, the harmonized tax will boost investment and productivity in the province.
“We are introducing a comprehensive, balanced tax package that will stimulate economic growth today and in the long run,” Duncan said. “Over the next 15 months we are planning to implement a single provincial-federal sales tax of 13 per cent. The single sales tax would begin July 1, 2010.”
Fruitman said that in the current economic climate the harmonization tax makes no sense. He referred to the government’s statement that the proposed tax would not net any revenue gains and questioned the purpose of the tax. “It sends the wrong message and most of us are going to be very upset,” he said.
Interim Progressive Conservative leader Bob Runciman suggested the proposed tax reforms amounted to nothing more than tax shifts and likened them to a large-scale shell game where money is moved from one place to another.
“Tax harmonization will mean higher taxes on a wide variety of goods and services,” Runciman said.
Howarth suggested that at today’s prices, the cost of gas would rise by $150 per year for the average Ontarian.
The government however appeared convinced of the goals, timing and significance of the budget. The finance minister thought this was particularly true, given that Ontario is the midst of a global economic storm not of its own making.
“A single sales tax removes barriers to growth and investment,” Duncan said. “Lower costs means that Ontario businesses will be able to hire more people and/or pass the savings on to consumers.”