1054 replies to this topic

[VicHockeyFan]

Well, when the HST was coming in and I had my home on the market, I had an interesting conversation with my Realtor. We both agreed that the new tax rules would mean more tax on the commission.

I agreed that I did not want to pay more in commission (+ HST) without getting more service. The arbitrary date of the new tax didn't get me any more for my money.

My Realtor agreed that he did not want to make less commission (to keep commission + HST at the pre-HST level), while still doing the same amount of work. The arbitrary date of the new tax didn't mean any less work for him in selling the home.

Both positions seemed fair to me. In the end we worked it out.

[Nparker]

"Cuts in Canadian fees and taxes will not be effective, however, unless airports and airlines co-operate in passing through the benefits to passengers,"...

Passing along benefits might have been helpful in getting the public on side with the HST. I sure haven't seen any savings.

[Bingo]

Passing along benefits might have been helpful in getting the public on side with the HST. I sure haven't seen any savings.

That is not my quote. It was made David Stewart-Patterson, the Conference Board's vice-president of public policy, that I posted on another thread.

Read it on Global News: Global News | Canadians border-hopping to catch flights up to 30% cheaper: Conference Board

[jonny]

I sure haven't seen any savings.

Have you tracked the price paid for every single item pre and post HST?

Just curious because I keep hearing people say "I haven't seen any savings" anecdotally, but of course nobody seems to have any evidence.

[Nparker]

Have you tracked the price paid for every single item pre and post HST...

Of course I haven't tracked every price, but I know that for services on which I previously did not pay HST no discount has been offered. A very specific example is getting my hair cut. If my stylist has been seeing any savings from the introduction they have not been passed on to me. Another specific example is dining out. I have yet to see a single restaurant lower their prices since the introduction of HST; whilst I as the consumer am charged an additional 7% on every meal I have. My strata has not been able to pass on any savings to me, although I now pay 7% extra on the costs of my property management.

And while I am not being charged any additional taxes on hard goods (clothing, furniture etc.) I cannot recall any specific instances of lower pricing since July 2010.

[jonny]

And you highlight the central issue the Average Joe has with the HST. They can see that they paid an extra dollar on their haircut, but most people do not remit tax and do not understand the inherent inefficiencies (and utter stupidity) of remitting TWO taxes to two different governments that have different rules, input credits, exemptions, remittance dates, etc.

When have you ever seen a retailer or restaurant actually lower their prices on anything? It generally doesn't happen. But, if the restaurant is being run a little bit more efficiently that means a little bit more profit to the owner which might mean a little bit larger Christmas bonus to their employee, which is good for the aggregate economy. More profit equals more wealth equals higher GDP equals greater investment and greater income taxes. That's always been the argument, but the Average Joe has let politics blind them from seeing the rational and clear arguments presented by economist after economist (again).

[Nparker]

...the Average Joe has let politics blind them from seeing the rational and clear arguments presented by economist after economist (again).

NO! It has not been politics that has "blinded" me to the benefits of a simplifed tax, it is the additional costs to which I object. Pass on the savings to me of the simplification and I will accept the HST.

[sebberry]

The price of my haircuts went up steadily over the last several years, but hasn't gone up once during the HST.

Perhaps in some cases it isn't lowering prices, but rather preventing some prices from increasing as soon as they normally would have?

[jonny]

NO! It has not been politics that has "blinded" me to the benefits of a simplifed tax, it is the additional costs to which I object. Pass on the savings to me of the simplification and I will accept the HST.

I'm sure the aggregate benefits to the overall economy of the efficiency of a singular tax would pass or trickle down to most, but like I said before, it's not as visible as paying more for your lunch and haircut.

By the way, as a matter of principle, why should you pay sales tax on a car but not on a haircut or a bicycle?

Why are many services PST exempt, but the purchase of said goods that require servicing are PST applicable? (e.g. buying a refrigerator is PST applicable, but servicing said appliance is PST exempt...figure that one out)

Why should you pay sales tax on clothing but not food? They are both necessities of life.

To be perfectly honest, many of the PST exemptions don't make much sense to me.

[Mike K.]

But, if the restaurant is being run a little bit more efficiently that means a little bit more profit to the owner which might mean a little bit larger Christmas bonus to their employee, which is good for the aggregate economy. More profit equals more wealth equals higher GDP equals greater investment and greater income taxes. That's always been the argument, but the Average Joe has let politics blind them from seeing the rational and clear arguments presented by economist after economist (again).

I'm not sure that's a good example. Essentially what you're advocating is to rob Peter to pay Paul.

Producers and exporters stimulate the economy more-so than the transfer of wealth between individuals (this transfer being taxed, and therefore padding government coffers). With the HST the government takes an even greater cut from a wider array of consumer items and services, in effect devaluing our money even faster with each transfer.

[jonny]

I'm not sure that's a good example. Essentially what you're advocating is to rob Peter to pay Paul.

Producers and exporters stimulate the economy more-so than the transfer of wealth between individuals. Each time individuals transfer wealth between themselves the government takes a cut, and with the HST, a much bigger cut on a wider range of products and services.

No. My point is that if businesses are more profitable overall, it benefits everybody. If you know anything about economics, my example was too "micro" in a "macro" environment. Focusing on the restaurant was a bad example, but the point is that businesses being more profitable is better for everybody on a macro level, even if poor us have to pay a bit more for some items.

I honestly don't know what you're getting at with producers and exporters. Importers stimulate the economy as well, but the backbone of our economy is small business.

Jon Kesselman from SFU put it much better in his tax paper than I ever could.

“Some losers will arise in sectors that have enjoyed a tax-preferred status for many years, such as restaurants and home construction,” says Kesselman, a co-originator of the now popular Tax-Free Savings Account. “But overall British Columbians will gain through a more competitive business sector yielding, over time, more investment, increased employment, and better-paying jobs.”

But of course the experts couldn't have been right on this one (I have yet to see a paper outlining why PST/GST is more efficient than HST).

[Mike K.]

You're saying small businesses are the backbone of the economy. I'm saying it's the producers and exporters that are the true generators of wealth in this country. Small businesses, unless they bring a net profit back into this country from foreign customers, simply recirculate wealth by servicing local consumers and each transaction between that business and a consumer devalues money through taxation (which is now higher with the HST). Government of course benefits from higher taxation on a wider array of goods and services.

[drt]

I think for HST proponents (and I count myself as one) framing HST as something for which savings would be passed along was a huge, huge mistake. Even if it's true, the cost of services and goods is so complex that it's absolutely impossible to prove. Many pro-HST folks were telling us about all the savings that are supposedly passed on, while the average consumer was seeing costs continue to increase or in the best case flat-line due to other factors (inflation, cost of gas, poor economy). The end result is that many people became bitter and resentful over repeatedly being told something that seemed to fly in the face of what their budgets and wallets were telling them.

In the end the case for HST would have been much better made on the grounds of simplicity and transparency. Simplicity and transparency sell really well with most people, but the pro-HST campaign didn't really stick to those points. It tried to tell people how much better off they'd be even though the overall macro benefits of HST weren't ever going to be sudden, drastic or noticeable.

To be perfectly honest, many of the PST exemptions don't make much sense to me.

I agree. Here's hoping the new PST regime doesn't include exemptions for, say, golf club memberships.

[Nparker]

Well put drt.

[sebberry]

The HST does make it cheaper for major producers and exporters to operate their business.

[Mike K.]

Yes it does. It makes things a little easier for all businesses, but the resultant cost savings that theoretically should lower the cost of goods and services for consumers (and which drt so eloquently described above) failed to materialize in a tangible way.

[Sparky]

I have belaboured this point before. The end cost of goods MAY have decreased......but the additional 7 % tax on labour has resulted in substantial price increases to the end user.

Note the definition of "end user" is the poor sap that does not have any tax credits to offset. (read strata councils and homeowners)

[jonny]

Note the definition of "end user" is the poor sap that does not have any tax credits to offset. (read strata councils and homeowners)

And that's precisely who consumption taxes target and what GST/HST does a good job at targetting and PST does not do a very good job at because producers also end up paying a lot of PST.

GST/HST is generally not a significant cost for producers because of the input tax credit mechanism, which is a significant feature of its design.

The argument I am hearing a lot is that people are upset with HST because overall, it has increased the tax base. This is true, and means the tax is somewhat regressive because the taxation burden ratio is higher on lower income earners than high income earners because the wealthy spend proportionately less of their income on consumables.

As a general rule, I 100% agree with reducing income taxes and increasing consumption taxes (which the Liberals have done) as in general consumption taxes do not tax savings, which we should be encouraging more of, and taxing consumption instead of income encourages working and the formation of capital, which will undoubtedly increase economic growth.

Anyway, this appears to be a go nowhere discussion in this socialist town.

[Nparker]

...in general consumption taxes do not tax savings, which we should be encouraging more of, and taxing consumption instead of income encourages working and the formation of capital, which will undoubtedly increase economic growth...

But for the majority of working folks who live paycheque-to-paycheque, who have no savings now, and likely never will, increased consumption taxes are highly regressive. The more they pay in taxes on everyday goods and services the less they have left to save.

I agree saving should be encouraged, and personally, I put aside $$$ every month, and have for my entire working career, but for many people this is just not a possibility.

[tedward]

...the resultant cost savings ...failed to materialize in a tangible way.

I think that to be fair the HST was not in place long enough for the market to adjust. It does take a bit of time before producers can incorporate the new costs into their prices and the anti-HST fight ramped up quickly enough that any adjustments that might have happened were put on hold pending a reversal of the regime.