Blogs & Comment

Ontario Budget highlights

The Ontario Governments 2009 Budgetwill harmonize the Goods & Services Tax (GST) and Provincial Sales Tax (PST). Ontario citizens will pay one sales tax of 13% on goods and services.
To help with the adjustment to a single sales tax, the Ontario Government will send families earning less than $160,000 cheques totaling $1,000 over a 12-month period. And certain items will be exempt. Of note, the 8% PST will not be applied to children’s clothes/shoes/car seats/diapers, books, and new houses under $400,000 (there will be a partial rebate for new houses between $400,000 and $500,000).
Harmonization will make the Ontario Chamber of Commerce happy. It has long argued that it will save companies $100 million a year by cutting the red tape involved in paying two taxes and by allowing deductions for the PST on new business equipment.
But families buying a newly built $500,000 house will have to pay an extra $40,000 in taxes. So say good bye to that dream house. Put a downpayment on that $350,000 box house like the rest of the proletariat — five feet away from your neighbours $350,000 box houses on either side, of course.
Another highlight is the big increase in the deficit to finance a huge fiscal stimulus much like the federal Conservatives announced earlier this year. This, of course, is largely unnecessary, in my opinion. The Canadian economy rises and falls on the tides set by the U.S. economy (and Ottawa has already unleashed a giant pick-me-upper). Recovery will come when the U.S. recovers.
The opportunity cost of blowing a such wad will be less money for health care and other vital public services. Wait times for operations likelyhave no hope of diminishing now. In fact, they could get worse. Hey, Id rather have an extra five years to live than a new hockey rink two blocks over. And dont overlook how government borrowing crowds out business borrowing, which would have otherwise financed new plants and jobs.