Report says HST to cost households in B.C. extra $320 a year

Postmedia News August 20, 2010 7:43 AM The Province:

The harmonized sales tax that was promoted as "revenue-neutral" will cost taxpayers in Ontario and British Columbia hundreds of dollars each year, a Canadian think-tank said Thursday. B.C. households can expect to pay an extra $320 a year, on average, after rebates meant to ease the transition expire, while Ontario families face an increase of $290, said the Canadian Centre for Policy Studies in a report. And, because changes to income-tax rates greatly reduce the impact for low earners, others, especially in Ontario, will pay well above the average, study author David Murrell said. "The middle class and upper-middle class get hit pretty hard ... I think it runs in the neighbourhood of $300, $400, $500 [a household]," said Murrell, an economist at the University of New Brunswick. Consumers now pay the full HST on some services and items that were exempt from B.C. and Ontario levies before the combined federal and provincial tax took effect July 1. But Murrell suggests HST proponents also over-estimated the savings businesses would pass along to consumers from input-tax writeoffs they receive under the new system.While one report for the Ontario government predicted a high, 90-per-cent pass-through rate by the third year, he expects just 60 per cent of savings to be passed on.(more)

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Impact of HST on Ontario and British Columbia Households
Written by David Murrell, Ph. D Wednesday, 18 August 2010

In this paper David Murrell, Professor of Economics at University of New Brunswick and Senior Fellow at the Canadian Centre for Policy Studies, measures the impact of the new HST tax, implemented on July 1, 2010, by the Ontario and British Columbia governments, on households. The paper focuses on the effects of the tax regime change, from the retail sales tax (RST) to the HST, on the five income quintiles as defined by Statistics Canada.

Click here to download a copy of the paper.