The HST is now a flow-through tax, just like the GST ( Value Added Tax). The feds collect it, but have to remit the 8 % to the Province. The PST was an add-on manufacturing tax. In my case, when I was in business, anything like purchases for re-sale could be deducted when you remitted the PST collected from end-users. You could also get exemption for a few other items, but it was a cumbersome method. The GST and now the HST does not affect business purchases, except, of course the work of collecting and remitting ( business all ready report the GST, so there is little incremental work here). When you remit, you deduct all paid taxes. With the computer programmes these days, it is as easy as 1,2,3,. So, we, the end user, are paying the tax, as before, except we now pay it on services and other previous exempt items such as books ( which hit me right in the book --pocket book, that is). The other negative is that it encourages the underground economy.My neighbour got his roof done, for cash, no tax at all. Thus, both levels of government lose. Also, the tax rebates we get ($ 700.00, hurrah !) is an one-time sop to the consumer. The winners here, of course, are businesses of all kinds, but especially manufacturers who buy input items. Whether they will eventually pass on the savings is a moot question; my feeling is that there might be some price pressures in highly competitive situations such as manufacturers of consumer goods. Groceries are also still exempt, thank goodness.
I do think the HST was a proper decision by the Province. In fact, I think the Cons. made a mistake by reducing the GST to 5% -- like buying voters with their own money. The world is moving to a value added taxation system. It is easier to police (and collect ) than income taxes, though it is more regressive and unfair to low wage earners, unless compensating tax credits are made. Someone has to pay the piper; pave the roads, pay for medicare and keep us oldsters happy, eh?
In Europe, for example, Britain; the VAT is about 23 percent. In Norway (my "old country"), the VAT on goods is 22%, on groceries 12%. Income taxes are similar to ours, except they tend to be more progressive in the upper brackets. They have to pay for the welfare state, one way or another. Yet, they seem to manage just fine; spending money like a house on fire, including regular vacations in Turkey.
