Board President and event emcee John G. Smith, listens as Stuart Johnston, Vice-President of Policy & Government Relations with the Ontario Chamber of Commerce, answers a question from the audience after his presentation on the Harmonised Sales Tax.

Making a case for the Harmonized Sales Tax plan

Stuart Johnston, Vice-President of Policy & Government Relations with the Ontario Chamber of Commerce, visited the Board of Trade for breakfast and an opportunity to talk to the business leaders of Ajax and Pickering, June 25.

He spent an hour explaining how the OCC came to support the single sales tax to be implemented in Ontario, starting July 1, 2010. Mr. Johnston drew a clear path between a single tax and a more competitive economy and described the impact the 'terrible' retail tax has had on Ontario businesses under the old outdated system.

A large crowd came to the breakfast to hear from Stuart Johnston, and learn more about the Harmonized Sales Tax to come into effect July 1, 2010.

Pointing to other regions in Canada, such as the Atlantic Provinces and a related tax change in Quebec, he explained the switch has been good for those areas.

•    The tax reform package is a significant victory for the Ontario Chamber network – after many years of advocating for smart tax policy – the efforts have paid off – first with the consolidation of the collection of corporate taxes which is now in effect; then the move towards eliminating capital tax; and now with the harmonization of the sales tax; at the same time – we have consistently advocated for a reduction of all corporate tax rates to 10% and the elimination of the small business clawback – each of these items has been achieved

Board President and event emcee John G. Smith.

•    Businesses of all sizes will benefit from rebates on PST paid on business inputs – Ontario businesses currently pay over $5 billion in PST which is about 35% of the PST paid in this province – much of it is hidden and none of it is tracked and therefore, many businesses are not even aware of the PST they are paying

•    Sales tax harmonization will dramatically reduce the cost of doing business in Ontario – giving Ontario a competitive advantage – so much so that other provinces in Canada are planning to follow suit

•   The combination of sales tax reform, corporate tax reductions and other stimuli will lead to an enhanced multiplier effect and generate a greater return on investment for the economy

Stuart Johnston, Vice-President of Policy & Government Relations with the Ontario Chamber of Commerce.

Some of the key facts he mentioned in his presentation and in provided material for Board members:

•    Federal government providing transitional funding of $4.3 billion over two years
•    Administrative savings for businesses more than $500 million/year through administration of single tax, instead of two
•    Retail sales tax on accommodations currently 5% - would increase to 8% but additional tax revenue will be funnelled into destination marketing fund
•    Businesses will have tax credits on provincial portion of tax for business inputs – with the exception of certain items for very large businesses (with annual taxable sales in excess of $10 million) and financial institutions – this is only for the first 5 years – after which full credits will be phased in over a three year period
•    Federal government will administer harmonized tax

Corporate Tax Measures
•    Rate for small business cut from 5.5% to 4.5% (18 % reduction)
•    Elimination of the Small Business Surtax, which was an additional tax of 4.67% on income earned between $500,000 and $1.5 million.
•    July 1, 2010 general corporate income tax rate reduced to 12% (14.3% reduction)
•    2013 general and manufacturing corporate income tax rate reduced to 10% - a 16.7 per cent cut (down from 14% and 12%, respectively).
•    Corporate Minimum Tax will reduced to 2.7% from 4% - and the threshold at which it is applied has been increased so that fewer small and medium businesses will be affected (new threshold - $50 million in total assets or $100 million in annual gross revenue)
•    An expansion of the Ontario Innovation Tax Credit to parallel the federal Investment Tax Credit for SR&ED

Peter Forint was among those who brought questions to the session.

Mr. Johnston then took part in a 30 minute Q&A afterwards to further discuss some of the misconceptions about sales tax harmonization.

Pickering Councillor Bill McLean had questions for Mr. Johnston, related to the impact on families and services that had been pst exempt.

There were many questions from members and Mr. Johnston explained that although many activities and products that were previously exempt to retail tax will now increase, he is confident the balance will come with the decrease in costs and prices provided to businesses and manufacturers.

Mr. Johnston urged the audience to continue to press the government for the answers they need in how the HST will affect individual goods and services and related industries. Learn more at the OCC website, occ.on.ca/.

You can downlaod Mr. Johnston's powerpoint presentation from the breakfast at the bottom of this page.