Eliminating Hidden Taxes

Previously in Ontario, PST (also called RST) was applied at every step in the creation of a product. Those multiple PST charges were embedded in the price you paid at the store – even though you couldn't see it. And of course, you paid PST on the final purchase price.

Here's an example of how PST was hidden in the cost of a suit jacket. Under the old system, taxes were paid at every step in production and passed on to consumers. Under the new HST system, most of those embedded costs are removed and savings can be passed on:

Current RST System: RST is paid on items at each stage of the supply chain; this becomes part of the cost to the next consumer. 8% RST charged on raw materials: supplies, furniture, vehicles + 8% RST charged on manufacturing: office supplies, desks, chairs + 8% RST charged on transportation: trucks, tires, maintenance, cell phones + 8% RST charged on retail operations: forklifts, signs and shelves = Embedded RST + 8% RST + 5% GST. Under the Harmonized Sales Tax, the HST is generally rebated at each stage of the supply chain, so it's not passed on to the consumer.

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