The Ontario Government announcement that it is moving to a harmonized tax system, beginning July 1, 2010, alarming many of our members. Some are asking Landscape Ontario to lead an industry campaign to fight the HST proposals. HST is a blend between eight per cent Ontario tax and five per cent GST.   

I don’t understand how adding an additional eight per cent tax onto previously exempt services, like landscape maintenance, is expected to stimulate the economy. I was intrigued with the loud support and praise for the HST from the Ontario Chamber of Commerce, board of trade, banks and many other groups.    

Before fighting, it is wise to understand why the HST is getting support from groups that regularly support economic development and prosperity initiatives.
 

Chamber of Commerce    

The chamber refers to the HST as visionary (please see http://taxharmonization.on.ca/facts.html). It claims the HST will put “Ontario on a path towards increased competitiveness, productivity and economic recovery that will benefit every Ontarian and every business operator in the province.” It maintains that the HST will “cut Ontario’s marginal tax rate on new investment in half.”   

• The government HST initiative was based on the Chamber of Commerce report. Please see http://taxharmonization.on.ca/files/HST_Report.pdf. The report makes a solid case for the benefits of HST including the following: Savings on business inputs (HST will now be a flow-through much like GST) transitional funding to cover the cost of new accounting and point of sales systems (This is not a benefit. These extra costs are the result of HST)
• Ease of administration (collecting one tax instead of two)
• Elimination of inflated consumer prices, because HST will be collected at each stage of the production process (I don’t understand this one. Please let me know if you do.)
• Introduction of a $260 tax credit for low- and middle-income families (This is also counter-intuitive. Why would the government see the need to introduce temporary tax rebates and tax credits if one of the proposed benefits is reduced consumer prices?).  

It is interesting to note that the Chamber report suggested exemption options for “labour intensive services.” The problem is this exemption option was not considered by the
government.   

The consumer will pay additional tax on just about everything. Logic tells me that customers will probably retreat on spending, because of extra expenses associated with many services. This situation will negatively impact our sector, at least in the short term. At the very least, the government should have consulted widely before introducing such dramatic changes. It also erred in not raising public awareness of the proposed benefits.   

It is important to address this issue. Landscape Ontario has written the premier and minister of revenue, asking them to consider an exemption for labour intensive services.  We need you, our members, to do the same. I also believe that it is important to frame our comments within the framework of the Chamber report.  The report gives us the logical rationale for our position. See the copy of a sample letter at www.horttrades.com/hst. Please use it yourself, or to write your own. Ask your employees to do the same. This is an important issue.