Easing the burden?

Author: Frank Matys

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A mix of darts and laurels greeted a provincial budget that adds new taxes to a host of everyday goods while easing the burden on business.
Blending the provincial and federal sales taxes into a single, 13 per cent tax starting in July 2010 will up the price of goods ranging from gas and cigarettes to heating fuel, gym memberships and dry cleaning – items not previously subject to provincial taxes.
However, a payment of $1,000 to families earning $160,000 or less annually is meant to help blunt the impact of the new tax, as is a $300 payment for single Ontarians.
Simcoe North MPP Garfield Dunlop called the plan “a complete farce.
“It’s like stealing food from a dog’s plate and giving him back a couple of bones,” he said. “That is how they are treating the general public.”
The government stands to reap a “windfall” in new revenue while offering taxpayers a token payment, Dunlop contends.
“They are saying, ‘We are going to bribe you with your own bloody money,’” he added. “They are treating people like idiots.”
Books, children’s clothing, diapers, car-safety seats, and feminine hygiene products are exempt from the provincial portion of the tax, which amounts to eight per cent.
Likewise, the added tax would not apply to newly-constructed homes costing less than $400,000, though homes up for resale would be hit, industry experts say.
Buyers and sellers will pay more tax on a range of services associated with real estate transactions, including legal fees, moving costs, commissions, and home inspection fees, the Ontario Real Estate Association warned.
Consumers currently pay only the GST.
“On a $360,000 house, it could add over $2,000 in taxes to the closing costs,” said Dan Stoutt, president of the Orillia and District Real Estate Board. “It is not cheap, and every dollar counts.”
Stoutt questioned the timing of the announcement, given the troubled economic climate.
“I don’t see why in a market where everybody is watching their money more, why would you make it more expensive when families are struggling to get by?” he added.
Jules Mckenzie, a real estate investor who owns and rents multi-unit buildings, applauds what he says are the budget’s business-friendly measures.
“They are giving business an incentive to do something, as opposed to taxing them and making them go somewhere else,” he said.
The blended sales tax will save corporate Ontario an estimated $500 million a year in paperwork costs, while small business taxes will drop to 4.5 per cent from 5.5 per cent.
Taxes on manufacturing and processing are set to fall from 16.7 per cent to 12 per cent, and to 10 per cent by 2013.
Manufacturers and small businesses will additionally benefit from a 100 per cent tax write-off for new computers.
“These (measures) are going to start attracting business back to Ontario,” Mckenzie said. “Now, they all seem to creep out to western Canada, so we will have something of a competitive advantage.”
Dunlop found some solace in the government’s plan to reduce businesses taxes, and applauded an increase in the tax credit for companies that provide apprenticeships.
Less popular in Dunlop’s mind was a spending plan that will exceed $100 billion.
“What are we seeing for that increase in spending?” he said. “Our kids are paying for that.”
Low-income families will see the annual child tax benefit rise from $600 to $1,100 starting in July, while those earning less than $80,000 will receive a tax cut of about 10 per cent.
Ninety three per cent of Ontarians will receive an income tax cut.
“There is no doubt this budget is a crucial step in bringing Ontario closer to reducing poverty by 25 per cent in five years,” said Seija Suutari, CEO of the United Way of Greater Simcoe County.
Higher child tax credits combined with more money for affordable housing and proposed increases to the minimum wage
will together “make a tangible difference in the lives of people in Ontario,” she added.
A two per cent increase to social assistance falls short of the mark, Suutari said.
“By and large, it is a good news budget, and is certainly working in the right direction, particularly towards poverty reduction,” she added.
With files from Torstar