by Kensel Tracy
In the Province of Ontario the provincial governments recently harmonized the Federal GST at 5% with the Provincial tax of 8 % for a total tax of 13% on all goods and services except for those few products which are restricted to GST only.
The rationale was that this tax would replace a manufacturer’s tax and provide business owners with the added cash flow from the manufacturer’s tax to create a significant amount of new jobs.
At the time I was thinking how can a new tax create a new job? The only way that can happen is if the government stimulates the job through government training or through some other method since the amount of money paid to the manufacturer is marginal compared to the costs.
One of the things the HST has stimulated and it sure as heck is not a lot of new jobs is the price of gas and the cost of electricity and heating oil. In the past heating oil and electricity two main stays of industry were not taxed. The price of gas was below the cost of gas in the United States.
Now with the combined HST, on top of a federal and provincial tax, gasoline shot up above the psychological $1.00 a litre price and is now $1.12 -1.15 giving the oil companies carte blanche to raise their prices without any consumer backlash. Higher gas prices are seen as the impact of the HST. Electricity in Ontario has gone through the roof and prices have increased also because of the impact of the HST.
Disposable income has also decreased. For example, since the consumer now has to pay as heat, hydro and fuel costs, that’s a $.20 cent per litre increase or $10.00 per tank of gas does not go into other products, just into the pockets of the oil companies and the tax man.
Take that same $10.00 and multiply that by the number of vehicles registered in Ontario of 10.5 million filling their tank once a week and that’s $100,000,000 million that is not spent by the consumer and again goes to just two sources, the government and the oil companies.
Are you getting my point? Taxes don’t create jobs. Companies and businesses do. Companies and businesses can only create jobs when they sell products. By cutting down on the consumers disposable income, less goods and services are acquired. With less goods and services purchased, less jobs.
So I think that government meddling and taxes are partly responsible for this mess we are in in both Canada and the U.S. Give someone $10,000 more per year and they are going to go out and buy new products and stimulate the economy. Somehow we have it all wrong in this country where jobs are limited due to high taxes and politicians with little or no business sense. Now .. where are those new jobs the HST was supposed to create.
Kensel Tracy is the Marketing Coach and a Senior Partner with the Corporate Coachworkz Inc. located in Chelsea Quebec and Ottawa Ontario, and also the President of Business Over Breakfast Clubs of North America. If you have a story of interest please contact him at kenselt@sympatico.ca.
For more information, please visit Kensel's TNNWC Bio.
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