Ontario’s Revenue Minister Wilkinson Explains the New Harmonized Sales
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Ontario’s Revenue Minister

Ontario’s Revenue Minister Wilkinson Explains the New Harmonized Sales Tax - HST


by Scott A. Sumner
Thunder Bay Business
    There was much interest at a recent meeting held by the Thunder Bay Chamber of Commerce with Ontario’s Revenue Minister. The event attracted over 100 interested business people who were not sure how the tax changes would effect them. The almost 2 hour meeting included some good discussions and left the audience with a much better understanding
of what we can expect when the new (  Harmonized Sales Tax - HST ) is put into effect July 1st, 2010. The new single tax which will be shared by the federal and provincial governments will end the existing 8% sales tax in Ontario and create a new 13% HST. Ontario will one of the
last provinces in Canada to adopt the new taxation approach only leaving British Columbia, Manitoba and Prince Edward Island as the last hold outs.

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    “ We need more jobs in Ontario and to compete and win in the 21st century we have to have a 21st century tax system. The current one  was created in 1961 when I was 2 years old. PST came in 1961. We are now competing in 2009 with 130 countries around the world that have
modernized their tax system  and we haven’t. When we take this step the only country in the world that hasn’t modernized their tax system is the United States. It will give our companies here a competitive advantage  for many years to come,” stated John Wilkinson, Ontario’s
Revenue Minister. “ While we are broadening the tax to more services all of that money is gong to permanent tax cuts for people and business. For every dollar we drop income tax for business we are dropping tax for people by $2 dollars. We feel we have found the the
right balance. The first year is going to be a year of transition for people and business and that is why we secured some $4.3 billion dollars from the federal government.  What we are doing with that money is putting it in the wallets of consumers in that first year because we
do know it will be a year of transition. It is going to take some time for our tax cuts and reductions in the cost of business to work it’s way through the economy.”

     Minister Wilkinson quoated the study  undertaken by Professor Mintz who feels incomes of people will rise  by as much as 8.3%, $47 billion more investment will occur and 590,000 more people  will be working. “ That means a bigger, stronger economy and that will help us a great
deal when we work our way out of our current deficit.We can’t get rid of our $24.7 billion deficit with a shrinking economy. We need a growing economy and the single most important thing we can to do to get our economy growing faster is to reform our tax system and go to a modern 21st century tax system. Our businesses are competing for jobs and investment around the world with the old tax system so we need to modernize,” said Wilkinson. “ Part of what is driving our deficits is that jurisdictions around the world are borrowing in the short term and doing public infrastructure as we wait for the private sector to recover from the recession. When that happens we won’t be doing much infrastructure  so that will take off some of this immediate pressure. All recessions end but the more important question is how strong do we come out of this recession. To be able to reduce and eliminate the deficit, that happens quicker with a stronger economy than a weaker economy.  What we are doing will strengthen the economy because in our opinion that is the route out of this deficit. Short term there is every good reason to borrow the money to make sure the recession wasn’t worse. For the three years previous we had a balanced budget.”
    “ We have been watching expenditures. Last year Minister Duncan restricted spending to the lowest level in over 8 years of government. When we saw the storm clouds coming we had controlled expenditures. What has fallen of the cliff is revenue. Corporate revenues dropped by
some 50% in one year and that has never, ever happened in the history of the province of Ontario. The problem we have is not expenditures  but the fact the revenue has dropped off so much,” said Wilkinson. “  Also modern economies around the world including Asia and North America have all agreed the most important thing to do right now is to borrow money and get people back to work  doing public infrastructure which generates jobs in the short term but makes our long term economy  more impressive. The investment we have been making in hospitals, universities,  roads and bridges are the thing we need to do anyway but we just sped that up. When the economy turns around we don’t want to be out competing with the private sector because we have advanced so much of it in these two years. I saw a great deal of that  infrastructure work coming from the airport today.”
   John Wilkinson is the first Certified Financial Planner elected to the legislature.  He is from Stratford, Ontario and ran a small business for over 20 years before deciding to enter public service. “ The reason why the premier asked me to implement the largest tax reform in 40 years in the province was because I have a background in tax and  am not shy about communicating. It was very important to get the $4.3 billion from the federal government to allow the economy to adjust. We have also made many income tax  reductions depending on how much income you make. In the first $37,000 of income we are dropping the tax rate
from 6.05% to 5.05% and that will be the lowest income tax in that bracket in the country. That adds up to about $ 300  which is like a 8% tax on $3600 of purchases. So on the one side we have that broad based income tax cut. That applys to 93% of tax payers and as a result of
that 90,000 Ontarians will not pay any income tax as they will go below that threshold.” said Wilkinson.
   Wilkinson will also be providing tax rebate cheques to Ontarians to help in the transition stage. More information is available on the Ontario government web site.  www.rev.gov.on.ca/en/



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