HST will cost families an additional $792

Ontario Premier Dalton McGuinty finally admitted that the Harmonized Sales Tax his government recently legislated will have a major impact on average or working families. McGuinty finally fessed up after data from Statistic Canada showed that the HST will annually cost the average family in Ontario an extra $792:

For families at the outset there will be an increase in taxation. It will affect … 17 per cent of their purchases (gasoline, home energy and Internet bills, tobacco, and domestic flights). Experience tells us that over time those savings (incurred by business) will in fact be passed on to consumers. It’s not going to happen all at once. That’s why we have the special support we have in place for the first couple of years (one-off transition payments of up to $1,000 per household for most low- and middle-income families). That’s why we reduced personal income taxes. We’ve tried to make this as fair as possible. But I want to reassert that what I am asking Ontario families to do is not an easy thing.

Many economists insist that the business-friendly combining the 8% provincial sales tax with the 5% federal GST, starting July 1, will stimulate the economy. What I want to ask is, why is everything that the Liberals and Conservatives do, in terms of economic policy, have to be business friendly? Why do they always cater and cow-tow to right-wing think tanks, who predominantly cater to the private world? How about the middle and working classes and the impoverished? How about public works programs? Why not instead just legalize, regulate and tax marijuana, which would generate billions as it is North America's largest cash crop? Oh right, that would require possessing a progressive vision, which is sorely lacking with the majority of our "leaders" these days.

Anyways, Ontario's NDP asked Statistics Canada to examine the HST numbers via its social policy simulation database and model. Andrea Horwath, Ontario's NDP Leader, was correct on this issue, as the NDP has from the onset been exposed to the tax harmonization:

The premier is finally admitting it and that’s why we had to do the study. We have asked over and over again for the government to come clean as to exactly the impact the HST is going to have on families in Ontario. These are numbers the government refuses to release.

The Statistics Canada data, which doesn't include the one-time transition money for familes, concluded that only families with a combined income of less than $20,000 would be in resonable shape after the 13% HST begins. For families with combined incomes between $50,001 and $60,000, it would cost $862 annually. For families earning more than $100,001, the HST would cost them an additional $1,732 a year.