The Ontario Chamber of Commerce is standing firm in its support of combining the GST and PST.
Speaking to business people at a gathering sponsored by the Kincardine Chamber of Commerce, President of Policy and Government Relations Stuart Johnston said his organization has lobbied the province to move towards a single sales tax for five years.
He says since the government announced Ontario would combine the GST and PST effective July 1st, 2010, they’ve found themselves in the odd position of endorsing government policy, rather than critiquing it.
Johnston explains the new tax as basically an elimination of the PST and the introduction of a 13 per cent GST collected by the federal government with eight percent being returned to the province.
Sales tax will apply to some products and services that currently aren’t subject to it, but exemptions are being made.
Municipalities and certain public sector agencies will be exempt.
For consumers, the tax will not apply to children’s clothing, footwear, and certain personal care items.
The province is also planning one-time transitional payments of 300 dollars for individuals with incomes under 80 thousand dollars per year, one thousand dollars for couples and single parents with incomes under 160 thousand, along with an ongoing tax credit program.
Johnston highlights the advantages to business owners of a single sales tax, saying it will be easier for them to plan their business models for the future and administrative work will be reduced by half because taxes will only be paid to one level of government.
Johnston says the savings will make it possible for business owners, invest in new equipment or staff, and pass the savings onto consumers.
As for the benefit to consumers, Johnston says when the Atlantic provinces and Quebec moved to a harmonized sales tax, prices went down.
He says because Quebec already has a harmonized sales tax, a trade barrier between the two provinces will disappear once Ontario adopts the single tax.
Johnston says introducing the tax during a recession will actually help the province succeed once the economy starts performing better.
Nicole Dalton and Sarah Pollock Managers of the Kincardine office of accounting firm BDO Dunwoody advise business owners to have plans in place for when the new tax takes effect, that includes making sure cash registers and computer software are properly programmed for the changes.
They also advise that customers are likely to be sensitive to any increases.
Johnston acknowledges the Ontario Chamber of Commerce knew the tax plan would not be popular with everyone.
However, he says consumer prices currently contain a lot of the hidden amount that retailers end up paying in PST, and with that removed, consumers could end up saving.
Agricultural Business Owner Randy Lemon says he’s not sure how the tax changes will affect him because the rules aren’t too specific yet, but he thinks it will be better in general.
Johnston says the Ontario Federation of Agriculture is in favour of the single sales tax because it will lower capital costs for farmers.
Realtor Linda Bowers, a member of the Kincardine Chamber of Commerce Board, says realtors will have to spend more time educating those selling and buying homes.
She says they’ll now have to pay tax on the commission to the realtor, as well as legal and home inspection costs.
Bowers says she found the session held informative and questions were well answered.
She also appreciates the representation from a local accounting firm to provide further input.
While the Ontario Chamber of Commerce is officially in support of the harmonized sales tax, the Kincardine chamber has not taken an official position on the plan.