In return for that day-to-day pinching of the pocketbook for consumers, Premier Dalton McGuinty's government is offering the income tax cut today, reducing the tax rate on the first $37,106 by one percentage point to 5.05 per cent from 6.05 per cent.
So this means that, for everyone who earns more than $37,106, you will save $371.06 in income tax.
Under HST, an additional 8% sales tax will be charged on items that were previously subjected only to GST. According to Revenue Ontario, that list is:
* Electricity
* Gasoline
* Heating Fuels
* Internet Access Fees
* Personal Services (e.g., Hairstyling)
* Professional Services (e.g., Legal, Accounting and Real Estate Fees and Commissions)
* Tobacco
So based on the information so far (I'll get to the factors I'm missing in a moment), the HST tipping point is whether you will be charged more or less than $371.06 in additional sales taxes over a year. The $371.06 would equal 8% of your total pre-tax purchases on items from the list above. So let's calculate:
$371.06/0.08=$4,638.25So do you spend more than $4,638.25 on things from the list above? If not, no need to worry. If you do spend more than $4,638.25 on the items on that list, then the amount of money you will be down is 8% of any amount over $4,638.25. Where N = the amount spent on things on the list:
(N-$4638.25)*0.08 In other words, if you spend $5,000 on things from that list:
$5000-$4638.25=$361.75$361.75*0.08=28.94So you'd be paying an extra $28.94 a year in tax.
If you're happy with a rough estimate, you can stop here. If not, read on as I make it more complicated (likely with only marginal impact on the final number).
There are three factors I haven't taken into account in this calculation:
1. The transitional tax rebate. I haven't taken this into account because it's only temporary. If you would like to take this into account, add $300 if you're a single individual, and $1,000 if you're a couple and/or have dependents.
2. What if you earn less than $37,106? Then replace the $371.06 in the calculation above with 1% of your income. Or replace X in the following equation with your income and plug it into Google:
(X*0.01)/0.08=3. HST not only involves increasing sales tax on items previously subject to only the GST, but also eliminating sales tax on items that are not subject to GST. Problem: I can't find a list of items currently subject to only GST. But here's how you'd calculate it. Where Y equals the amount spent yearly on things currently subject to only GST:
($371.06+(Y*0.05))/0.08The result of this equation replaces $4,638.25 above as the tipping point.
Want one giant overall equation?
N = the amount spent annually on things currently subject to GST but not PST
X = either your annual income or $37,106, whichever is less
Y = the amount spent annually on things currently subject to PST but not GST
Z = what HST will cost you. If it's a negative number, it will save you money.
Z=N-((X*0.01)+(Y*0.05)/0.08)*0.08
2 comments:
HST tax savings can be calculated here: http://www.rev.gov.on.ca/en/taxchange/calculators.html
No one believes that Ontario will emerge from this recession the same as it went in. We need to become more competitive.
The Canadian Centre for Policy Alternatives issued a report looking at low-income, middleclass and wealthy families and found that the HST is going to be revenue neutral.
A report by TD Bank estimates the HST will reduce cost of doing business in Ontario by roughly $5.3 billion and that the majority of these savings will be passed on to customers within the first year. In fact, the majority of items you purchase - 80 percent – will see no tax change at all.
A recent report by economist Jack Mintz confirms that Ontario needs to reform its tax system to create jobs and put Ontario back on its feet. It says, as a result of the HST, within 10 years Ontario would see:
o An estimated 591,000 additional new jobs
o Increased capital investment of $47 billion
o Increased overall annual worker incomes of up to 8.8 per cent, or $29.4billion
We have a choice: we can refuse to fix what’s broken, resign ourselves to the idea that Ontario will be less competitive or we can move forward and get the jobs Ontario needs.
Please visit: http://sites.google.com/site/thetruthaboutthehst/
When I was in university, I applied for a Communications internship with the Government of Ontario. I never heard back.
Their loss.
Post a Comment