The impact of sales tax harmonization in Ontario and B.C. on Canadian inflation

By reducing tax (HST) will reduce the cost of doing business the cost of doing business in the two provinces, the aim of by a total of $6.9 billion in Ontario and British the reform is to make businesses more competitive and to Columbia encourage business investment and future income growth •. The majority of the cost savings will pass onto for their economies, yet the policy has taken a lot of he [...] But recognizing that the transition from the current tax system to the HST may have negative 10 Ontario implications on households in the near term, especially B. C. lower income households, and particularly in the early 5 transitional period, both the government of B. C. and Ontario in co-operation with assistance from the Federal 0 Government have offered their support. [...] At the time of Forecast the introduction of the GST, the majority of homes in 3 Ontario and B. C. were below $300,000, and as such the 3 purpose of the rebate was to leave the cost of purchasing a 2 Without new home unaffected by the tax. [...] B. C. The combined impact will be a 0.4% increase in B. C. The chart above illustrates that the higher the cost of average Canadian consumer prices, relative to where they the home, the higher the tax burden. [...] The impact of the change in the tax on the final cost In both provinces, corporations with over $10 million in of a new home will show up in the mortgage interest taxable sales cannot claim input tax credits for five years, cost component of CPI, as the higher principal required and thereafter the tax credits will be phased in over three to purchase the house means consumers will pay higher years