Ontario's minister of citizenship and immigration met with Willowdale businessmen and social service workers Monday, June 28 to discuss the effects the Harmonized Sales Tax (HST) will have on businesses and how it can help with newcomer employment.
The small group met with Eric Hoskins and Willowdale MPP David Zimmer at North York Central Library to learn how they can benefit from the HST, which comes into effect July 1, replacing the province's 50-year-old tax system.
Come Canada Day, the Retail Sales Tax (RST) will be replaced with a modern tax that will be combined with the federal Goods and Services Tax (GST) to create the federally administered HST.
The provincial portion of the HST will be the current eight per cent and the federal portion will be five per cent, for a combined HST rate of 13 per cent.
According to the Liberal government, the HST will result in the tax rate on business investments in Ontario being cut in half, allowing newcomer communities, which often face higher levels of unemployment and underemployment, to benefit through job creation, which is expected to top 600,000 in the next decade.
"Ontario is very fortunate to receive almost half the immigrants to Canada each year," Hoskins said. "That's 120,000 each year. They are highly skilled and 70 per cent have post-secondary education. The challenge these individuals face is getting licensed and a job that reflects the skills they have. The HST is the single most important thing we can do coming out of a recession to strengthen the economy and create jobs."
Hoskins noted prices for 83 per cent of purchases and services will not change and for the 17 per cent of consumer purchases that will see an increase, the McGuinty government introduced tax cuts Jan. 1 to help ease the transition.
The Ontario sales tax transition benefit payments will provide up to $1,000 to most families (including single parents) or up to $300 for most single people.
The payments will be made in three installments in June 2010, December 2010 and June 2011 to 93 per cent of income taxpayers.
"We are coming out of one of the worst recessions in generations and felt it was important to create an environment that was better for business," Hoskins said, noting the corporate income tax rate will be lowered from 14 per cent to 12 per cent to 10 per cent over three years.
According to the province, replacing the RST with the HST allows most businesses to be reimbursed for tax paid on their business inputs through the use of input tax credits.
These credits will be paid to most businesses or the HST they originally paid on many of their purchases and capital investments, providing significant savings by lowering the tax burden on business.
"I'm looking forward to July 1," Hoskins said. "Rather than me or the opposition telling you (about the HST), you can see for yourself."
With the price being raised on certain items and services, including gas, gym memberships, hockey rink rental fees, cigarettes and hunting and fishing licences, concern was raised that increased tobacco cost could drive contraband availability.
Zimmer said a working group is coming up with a strategy in dealing with contraband cigarette sales and a report should be ready in the fall.
Young Lee Ha, executive director of Korean Canadian Women's Association (KCWA) Family and Social Services, said often immigrants, who can't find jobs in their field, opt to go back home.
"It's a common trend in the Korean community," she said. "Separating the family creates family issues. We will have to see how the HST unfolds before deciding if it's a good thing."