The minister in charge of economic development and international trade in Ontario says the province’s decision to implement a harmonized sales tax will create jobs and save most taxpayers money.
Sandra Pupatella made several stops in Thunder Bay on Thursday and said that through rebates, permanent tax credits and tax reductions about $5 billion will be returned to Ontario businesses and up to 600,000 jobs will be created over the next 10 years.
The HST is slated to take effect on July 1.
She said it will save businesses money because all along the supply chain they will be able to claim HST rebates, ultimately lowering their end-cost and the amount of paperwork that must be done.
The tax reform will also cut $2.4 billion in corporate taxes annually.
The government contends those savings will be passed along to the consumer as the market adjusts and competition kicks in, though Pupatella admitted there is plenty of skepticism out there, accusing opposition parties of spreading myths and lies.
"Consumers are all going to say, ‘Oh, they’re just going to keep the money.’ Realistically, this is a world economy that we’re facing now, bigger and better than ever before. They need to be competitive, and businesses will do what businesses do. They will be competitive and they will lower their costs," Pupatella said.
Lower prices in turn will create more demand, forcing businesses to hire more employees. At the same time outside investors, looking at one of the least complex tax systems in the world, will turn to Ontario in droves.
Craig Urquhart, president of the Thunder Bay Chamber of Commerce and owner of Intercity Industrial Supply, said he expects to save $16,000 alone this year on the purchase of two $100,000 trucks, and promised those savings will be passed along to his customers and ultimately lead to more jobs.
If he tried to horde the savings, his business wouldn’t last long, Urquhart said.
"The market sets the price, not the business. As our costs lower, we’re not in a position, we’re not capable (and) we don’t have the option to hang on to that extra money. It has to go the end user," he said. "It’s the cost of doing business that’s dropping. So it’s the cost of the PST, that’s coming out of the supply chain that is the saving in the price."
However, not all businesses are like-minded. Earlier this week BMO released a survey that showed that 51 per cent of Ontario business owners believe HST will have a negative impact on their business. Only 33 per cent felt it would be a positive result.
But Pupatella said the days of a low Canadian dollar are gone and the HST is the best way a province emerging from the worst recession since the Great Depression can compete on a global scale.
"We recognize there are some areas where people will pay more," she said. "In fact, 17 per cent of what we pay for is going to see a harmonized sales tax that only would have had the GST before. But that leaves 83 per cent of what we buy with no change."
To combat the increases the province is providing $1,000 in rebates to most Ontario families to help cover added costs to goods and services, like haircuts, home heating and gasoline that were previously exempted from the provincial sales tax.
"For most families of moderate income, they’re going to do even better," she said. "We’ve also doubled the property tax credit (from $250 to $500) for seniors. Ninety-three per cent of all income tax earners are getting a cut that is permanent."
The HST has proven to be a polarizing issue in Ontario politics, but Pupatella, who represents a hard-hit Windsor riding, said the opposition parties are spreading myths and lies and ignoring several high-profile special interest groups, including Ontario Chamber of Commerce and the Canadian Association of Retired People, who have backed the plan as beneficial to Ontarians.
Otherwise she couldn’t support the plan.
"I want my neighbours to work," Pupatella said. "Business needs help and it’s never been more important than now."
Minister of Northern Development, Mines and Forestry Michael Gravelle agreed.
"We could sit back and resign ourselves to the reality of the economic downturn and do nothing, or we can enhance change," he said, echoing Premier Dalton McGuinty by calling the HST "tough medicine."
The province has exempted a number of items from full HST charges, including books, children’s clothing and footwear, children’s diapers, car seats and feminine hygiene products.
Other products exempt from the eight per cent provincial portion of the HST include newspapers and prepared food that costs less than $4.
