Centre Wellington councillors considered a request on Monday night to oppose the provincial government’s plan for a harmonized sales tax (HST).
Then, they deferred their decision.
The request came from the municipality of West Perth. It appealed to Premier Dalton McGuinty and the provincial government to stop the proposed implementation of joining the provincial sales tax with the current Goods and Services Tax (GST).
It asked for support and a letter to be sent to Revenue Minister John Wilkinson, of the Perth-Wellington riding, and to the premier.
West Perth stated the reason for the request is “This double taxation will provide undue hardship to the residents and businesses of Ontario.”
Currently, some goods are taxed by one, but not the other. The harmonized tax would see both taxes apply to many of those goods – thus creating a huge tax increase. The two taxes added together today would reach 13 per cent on purchases.
Councillor Kirk McElwain had asked that the issue be considered at council. He said he was living in New Brunswick when that province harmonized its provincial tax with the GST.
He predicted double taxing is going to cause problems in Ontario, especially for seniors and those on fixed incomes.
But, councillor Walt Visser, pointed out the proposed HST “is hailed as one of the best stimulus in Ontario for business.”
He added that the Association of Municipalities of Ontario is currently studying the issue.
Further, Visser said, Centre Wellington council has a policy of not considering any resolutions from municipalities.
That policy was set because, as Visser noted, council would be “getting 10 to 20 of them a week.”
Mayor Joanne Ross-Zuj said that at the recent AMO conference, Premier Dalton McGuinty and Finance Minister Dwight Duncan had announced there would be “some kind of benefit” to municipalities when the new tax is implemented next year.
Councillor Bob Foster asked how the tax would affect businesses.
Treasurer Wes Snarr noted he had sent a report to council in June about it, but added that until the details are announced, much of the answer is guess work.
Snarr said in that report that books, children’s clothing, footwear, car seats, car booster seats, and feminine hygiene products would be exempt from the provincial (8%) portion of the HST, and also that “new hosing rebates will be available on the provincial part of the HST for buyers of newly constructed homes.”
Snarr added that municipalities will continue to receive a full rebate of the federal GST portion, but a rebate of only 78% of the provincial portion. That would cause reduce some costs, but also increase the cost of PST exempt purchases by a municipality for new construction and renovation by 1.78%.
He report stated, “The province’s position is that the level of the rebate makes the financial impact on Ontario municipalities revenue neutral, however the jury is out on this. The impact on an individual municipality depends on its volume of PST exempt purchases.”
Snarr told council there is the expectation that small businesses will benefit through simpler paperwork, and dealing with “one set of rules instead of two.”
But McElwain said the tax is a major problems for all other residents.
He said the tax is supposed to be “revenue neutral” so if business benefits, citizens will have to pay more taxes to make up that shortfall – “Every taxpayer out there except for small business.”
He said he saw first hand in New Brunswick when the harmonization took place, and “how hard the impact hits.”
Deputy-treasurer Mark Bradley said that at AMO it was clear that this is part of a tax reform program. He suggested that council defer any decision until staff can get the details and determine what benefits the HST might have.
“There’s a lot of rhetoric out there – and people are getting concerned,” Bradley said, adding council can make a better informed decision by waiting for information.
But McElwain argued, “By then it’s too late. If we have any input and wait for their ‘education package’ … We should do it [decide] now.”
Visser agreed with him on that, stating that council should make a decision soon – if it does anything with the resolution at all.
Mayor Joanne Ross-Zuj said the finance department should bring a report to council for its next meeting for a decision.
