Will Savings Made By New HST Tax Be Passed Onto You- Never

Tuesday, August 25, 2009 03:45 AM

We are being told that the HST will see a decrease in prices that we pay for our goods and services because the savings those large companies will make in the harmonizing of the two taxes will be passed onto you.

I don’t buy that.

We are being told that when the GST was introduced in Canada it had the effect of reducing prices because manufacturers were no longer paying the 12% manufacturing tax and the savings were passed onto us. I didn’t believe it at the time and today have no reason to change my mind.

If you dig a little deeper into why prices indeed came down for many manufactured items following the introduction of the GST , you will find that prices did come down for many goods in Canada, but it was not a reflection of what took place in the GST, but rather new stiff competition had been introduced.

For example the Canadian appliance market almost went into the tank and a number of Canadian manufacturers did just that because the USA was able to land their appliances in Canada without the former duties and that resulted in the prices coming down to reflect the US price for these same goods.

Did the GST force companies to reduce their prices? No. Anyone who was not susceptible to the Americans pumping their products into Canada, simpley added the new found money to the bottom line.

Will that change under the introduction of the HST where companies will in fact see savings in their production costs? Don’t hold your breath waiting for it. Unless we have strong competition we have found in the past that the market prices will dictate what the final price will be.

So what does it mean for the average resident of BC? It means you will be digging deeper into your pockets to pay for the new HST in a host of services.

Anyone who thinks that when government introduces a new tax that you are going to save money is dreaming in technicolour. The introduction of the HST will be no different.

I’m Meisner and that’s one man’s opinion.

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Posted on Tuesday, August 25, 2009 03:45 AM in Views by Ben Meisner

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Comments

Posted by: Resident on August 25 2009 7:22 AM

Goggle had an article on the web that stated BC businesses have come out in support of the HST. This is a bit of a no brainer. I would think if my taxes were going to decrease I would also be in support of the measure. I wonder if BC business would be so vocal in their support if the HST actually increased their costs rather than decreased their costs? Business passing on their savings to the consumer is just a dream. We all can surely know now where the setiments of the Liberal gov't lie now. The only time the general public gets the attention of the Liberals is the 30 days prior to a provincial election.

Posted by: MoneKate on August 25 2009 7:27 AM

So with this new harmonized tax and you are not a resident of BC, do you get the tax back like visitors do with the GST?

Posted by: SteveB on August 25 2009 10:59 AM

I have a small business and I think the PST sucked enough without moving to HST. I'm a service provider and as such did not need to charge the PST, but now everyone will get the chance to pay 7% more for my services. As a company I'm not seeing any difference in my costs, wait I lied, now I have to do more paper work. And some of those big businesses are already PST exempt, which is the reason I had to register for PST so I could stop paying PST on required parts that they were not going to pay back to me. It was a big enough headache before they started this. Just like a monkey ******* a football.

Posted by: Wolfie on August 25 2009 11:49 AM

"So with this new harmonized tax and you are not a resident of BC, do you get the tax back like visitors do with the GST?"

Now you will get the whole 12% back, if you are not a Canadian. If you are a Canadian from another province, you will get it all.

Posted by: Wolfie on August 25 2009 11:50 AM

Sorry, that was a horrible typo. I meant to say that if you are a Canadian from another province, you won't get anything back.

Posted by: Loki on August 25 2009 11:52 AM

Goggle = Google?

Posted by: gus on August 25 2009 12:15 PM

nope ... Goggle = Goggle.ca

http://www.goggle.ca

or Goggle - Goggle.com

http://www.goggle.com

Posted by: lmorge on August 25 2009 12:56 PM

Gee, wouldn't it have been easier to settle this Campbell & Goons, Inc. problem during the last election? But I guess it would be hard to do when something like one half of the population didn't even bother to vote.

Hopefully the ones getting screwed right now are not the ones who didn't vote for him. Justice would be the people who voted for Campbell getting their just rewards.

There is a saying that people deserve the government they voted for but it's also true that people deserve the government they have when they are too lazy or stupid to even bother voting.

Good luck getting Mr. Arrogant to listen

Posted by: Wolfie on August 25 2009 2:02 PM

"So with this new harmonized tax and you are not a resident of BC, do you get the tax back like visitors do with the GST?"

Obviously that's not happening. He knows who butters his bread. Big business loves the HST.

Posted by: Wolfie on August 25 2009 2:03 PM

Sorry, the thing I meant the paste the quote of was:

"Hopefully the ones getting screwed right now are not the ones who didn't vote for him. Justice would be the people who voted for Campbell getting their just rewards."

Obviously that's not happening. He knows who butters his bread. Big business loves the HST.

Lucky that was still on my clipboard from my last O250 visit, not something personal and embarrassing...

Posted by: gus on August 25 2009 2:09 PM

http://finance.sympatico.msn.ca/investing/news/businessnews/article.aspx?cp-documentid=21342796

Time to get rid of the fellow next door too.

"Premier Ed Stelmach says it could take two or three years for Alberta's depleted revenues to recover from the recession.
Stelmach says despite speculation of a record $7 billion budget deficit this year, his government won't raise taxes and is reluctant to cut jobs."

Depleting the piggy bank the gasoline buyers in Canada and the USA filled for the Albertans.

Posted by: Harbinger on August 25 2009 3:29 PM

No HST on lottery tickets, I hope.

Posted by: gus on August 25 2009 8:43 PM

Just on the winnings ....

Posted by: Chester on August 25 2009 9:11 PM

Everything will be passed on, honest. The last guy in the line pays. That is the way it is supposed to be. Every additional cost must be passed on to the consumer. That is the cost of doing business.

Higher labour costs, higher taxes, higher cost of materials = and higher prices for sale of services or products to the consumer.

Business has to build in the increasing cost of doing business and pass it on to the consumer. Hasn't anyone ever been in business?

Posted by: kitkat on August 25 2009 11:39 PM

Thanks Chester..., it doesn't take the sting out of it though.

Posted by: gus on August 26 2009 4:34 AM

An interesting thing happens when one is not providing something that is a need, but something that is a want, and when one does not have a monopoly in the market.

It then becomes more than simply a matter of passing on costs. If that is all it were, then being in business would be simple. In reality, it starts to become a matter of trying to find savings and passing those along in order to stay in business and especially in order to grow in business.

1. less expensive suppliers
2. less inventory
3. quicker turnaround of product
4. increase market area
5. increase worker efficiency/effectiveness
6. decrease labour cost
7. less expensive business location
8. less business space
9. fewer in house staff committments with more contracting out
10. reduce after income profit

If one can do all that and then some, in addition to having excellent service quality and quality products, then you are likely to stick around for some time while seeing others bite the dust.

In the end, you are right, of course. If you do not cover your costs, pretty soon you will be out of business. Sort of like the PGSO. Except, unlike them, it is rare when a private business can go cap in hand to be bailed out when you make poor business decisions.