Starting July 1, 2010, Ontario will replace the Provincial Sales Tax (PST) with a 13 per cent federally administered Harmonized Sales Tax (HST). To ease the transition, Ontario has already cut the tax rate on the lowest income bracket by 1 per cent, will increase transfer payments, will provide an one-time transition benefit payment for most families and will cut corporate income taxes. Though there are some sane voices (see post Not a Tax Grab After All: CCPA report on HST), many in the media insist on depicting the HST as a tax grab. Thankfully, despite the shrill opposition from the Tories and the NDP, Ontarians seem to have no interest in raging against the HST.
Today, the Ontario Government released a report that estimates how much the HST will cost families in various income brackets. The report found that in Year 1, the HST will cost the 16% of families earning between $125,000 and $300,000 an average of $30. Every other income range will see some savings. The 32% of families with an income of between $4,000 and $40,000 will save $510 in Year 1 and $205 in Year 3. The 31% of families earning between $40,000 and $80,000 will save $435 in Year 1 and a more modest $25 in Year 3. The HST will cost an average of $200 for families earning between $80,000 and $125,000 and an average of $405 for those earning $125,000 to $300,000 in Year 3.
The report notes that the analysis uses cautious assumptions on how much savings businesses will pass through to consumers. It also points out that the analysis ignores benefits to Ontarians in terms of higher incomes and more jobs resulting from the HST and corporate income tax cuts.
