Wednesday, November 18, 2009

Changing Spending Ways

If you live in Ontario, starting July 1, 2010 you'll start paying a blended 'value-added' tax of 13% on most of your purchases. This blended rate includes the current 5% Goods and Services Tax (GST) and the 8% Provincial Retail Sales Tax (PST). The Liberal Government who introduced this nefarious concept did so on the premise that it was going to make Ontario businesses more competitive in the global environment.

Currently they are completing the standard 'dog & pony' show to various communities, business groups and the like on the positives of this new tax. It's also given them an opportunity to scale the presentation to the audience by making reference to some of the exceptions available. (In Hamilton, home of the original Tim Horton's, it was stated that your morning coffee would be exempt…all hail the great and mighty savings.) Within the various presentations are facts raised that Ontario is about to enter one of its worst debts in history, and short of making cuts to services, the Government is in desperate need to raise revenue through new venues. Introducing the HST as a boon for businesses becomes the perfect smoke for the mirror.

Adding insult to injury is that the HST will apply to basically the same items as what the GST covered…which means we are now going to be paying an additional 8% on services normally received today where we pay only 5%. Apparently the Government hasn't figured it out yet: that there is a limited amount of dollars to be spent, and if the cost of that product or service increases, then the consumer will change their spending ways. I've made a list of some of the changes I'm looking at doing to preserve my limited income:

  • Newspaper subscription
    • I pay monthly for this, and therefore not exempt. The exemption applies at the point of sale.
      • Therefore, I will be cancelling my newspaper subscription.
  • Cable TV
    • This is a tricky one as I have more TVs in my house then I do people. I am working on doing a cost analysis on what my current plan is, versus other options. Certainly a change in viewing habits will be forthcoming.
  • Home Phone
    • I've begun to think why I have this anymore. Certainly with the ease and accessibility of cell phones, and knowing that both bills are going to be hit with an 8% increase, one of them is going to have to go.
      • Say goodbye to the Home Phone
  • Hydro
    • This is a double hit for most of us. As of January 2010, all Ontario homes will be charged based on time of use, thanks to the Smart Meters that were installed recently. It's going to be back to basics baby, cooking outdoors, hanging clothes to dry, extra blankets and sweaters in the winter…I think you get the idea.
  • Dining Out
    • This has to be the most asinine exemption put on the table. The Liberals actually think that I'd be okay with purchases under $4 as being tax exempt? Consider this; if I'm going out with a buddy for a quick burger, we're now going to be paying separately. And, if we both pay by debit, we've just cost the restaurant between $0.12 and $0.30 in debit charges the restaurant owner will have to pay to his bank.
  • Fuel
    • The only way I can get around this one is to become more transit-friendly. For me, that means more business in another city, as their transit system better suits my needs.

I am sure I am not the only one who will change spending ways, and based on the above samples, I fail to understand how those businesses affected by my changes in spending ways will be pleased with this new taxing system. Every company associated with the aforementioned will see a decline in sales (albeit, maybe only mine). There are of course other negative impacts of the new HST, but I wanted to highlight the ones that have a daily impact in my life. At the end of the day, I have no appetite for doling out more taxes to the government and seeing nothing new in return. This is a sham, plain and simple.

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