While it might appear to be too late to bring about change, there continues to be a growing protest against Ontario’s Harmonized Sales Tax which comes into effect July 1. In fact, businesses have already started charging the HST for goods, services and large ticket items like new homes that are scheduled to be delivered after July 1.
Why should you care? Because things that were not subject to the 8 per cent Provincial Sales Tax will now be taxed at 13 per cent under the HST. Essentially, the province is marrying the existing PST of 8 per cent and the Goods and Services Tax (GST) of 5 per cent to create one tax of 13 per cent known as the HST.
Under the HST, home buyers and sellers will have to pay extra tax on a range of services associated with real estate transactions such as mortgage insurance premiums, title insurance, legal fees, moving costs, real estate commissions and home inspection fees. Currently, consumers only pay the 5 per cent GST on these services. But it doesn’t stop there. We are talking about everything you purchase – electric bill, gas bill, water bill, condominium fees, insurance premiums and every other product and service you purchase. There are almost no exemptions.
The current PST does not apply to services, nor does it apply to the purchase of certain goods. The new 13 per cent tax will therefore extend the old 8 per cent PST tax rate to the purchase of all goods and services. The HST will apply to the purchase of new homes. If a person were to purchase a new $1 million home in Toronto, they would pay roughly $200,000 in taxes as a result of the Ontario land transfer tax, the new city of Toronto land transfer tax and the new HST. A tax like that could cause property values to fall and put the new home industry into a downward spiral, taking thousands of construction jobs with it. The fear among some is that in time, politicians will start looking at extending the HST to existing homes to mitigate the damage to the new home industry.
Canadians have two things they have been able to count on as being tax free – things that they can use to save money and accumulate wealth. Those are your primary home and RRSPs. That’s it. The extension of the HST to homes is simply a tax assault by the government. On top of that there are a myriad of fees and taxes that will now carry the HST – city property taxes, garbage fees, water fees, parking permit fees, vehicle licence plate fees, gasoline taxes, liquor taxes, entertainment taxes and the list goes on and on.
There is a group that still wants to fight back, even though this may seem to be a hopeless 11th hour pitch. If you take this issue seriously and still want your voice to count, you can sign a province-wide petition at www.unfairtaxgrab.com. If you don’t speak out … you won’t be heard.
Dan Cooper is an award winning Broker with Royal LePage Real Estate Services Ltd., Brokerage – the Number 1 Royal LePage Team for Canada in 2009. He can be reached at 905.338.3737, direct line at 905.849.3303 or through his innovative and interactive website at DanCooper.com. Be sure to catch the Dan Cooper Real Estate Series on DailyWebTV.com. For his free booklet How To Sell Your House For Top Dollar – Fast! or his Guide to Oakville Real Estate, please call the Dan Cooper Team.