Ottawa economy could take a hit from harmonized sales tax

At the pumps

Filling up at the pumps in Ontario could cost you a little bit more under the proposed HST legislation. Photo: Paul Moore

By Paul Moore



The federal Liberal party has announced it will support the Conservative government’s controversial bill allowing Ontario and B.C. to merge their sales taxes with the federal GST.

After a caucus meeting Tuesday, Liberal leader Michael Ignatieff told reporters on Parliament Hill that the party vote in favour of the bill, which will create “harmonized” sales taxes (HST) in the two provinces.

“This is a request from the provinces because they believe it will improve the competitiveness of their economy and create jobs,” Ignatieff said. “We will support this legislation in Parliament.”

Ignatieff’s announcement means the bill will almost certainly pass in the House of Commons.

Meanwhile, question period was suspended at Queen’s Park on Tuesday afternoon as two Conservative opposition MPPs protested a lack of public consultation on the HST issue.

However, if the legislation passes at both the federal and provincial levels, the changes will take effect on July 1, 2010. Ontarians would then have to pay eight per cent more for items now exempt from the provincial sales tax.

As she stepped out of a salon on Bank Street with a fresh new hairdo, Cheryl Fredricks was shocked to learn that, next summer, her $40 cut and style will cost her another few loonies.

“It just seems like the government is always trying to get us,” she said. “I feel like we pay enough already.”

At the Drummond’s gas station just a few blocks away, self-employed carpenter Jeffrey Matthews also wrinkled his nose at the

idea of paying more in taxes. He was filling up his pickup truck, something that he said will cost him an extra $50 every month under the HST legislation.

“I have to drive to get to my jobs, so I pay for gas a lot,” he said. “It may not seem like much, but for a guy like me, an independent businessman, that’s a big hit … It’s hard enough to make ends meet as it is.”

Carleton University professor and taxation expert Allan Maslove said the HST changes could hit Ottawa harder than other Ontario communities because the city does not have a large manufacturing base.

“Goods producers are probably going to be a little bit better off, and the ones that are going to be hit a little bit, if anybody, are service providers … I think it’s fair to say that Ottawa is a little more service-oriented, so it might affect Ottawa in that sense a little more.”

But, he added that he doesn’t anticipate the changes will be “really that dramatic” and may even benefit the Ontario economy as a whole.

“I think it’s the right move. I think it should have been done years and years ago,” he said.

MPs are expected to vote on the HST bill later this week.


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