Winnipeg Free Press - PRINT EDITION

Keep HST off my goods: biz

NDP told to proceed with caution on tax

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OTTAWA -- A harmonized sales tax in Manitoba is far from a done deal but efforts from various industries to sway the government's hand are well underway.

From realtors to farm groups, grass cutters to book sellers, everyone who currently doesn't have provincial sales tax charged on their goods wants to keep it that way.

But if Manitoba decides to bow to pressure from the federal government to merge the PST with the GST, many of them will not get what they want.

Mike Moore, president of the Manitoba Home Builders' Association, said the key is consultation.

"You can't make a decision that will please everybody, but if people feel they were listened to, that's huge," Moore said.

Moore said neither Ontario nor British Columbia spent enough time consulting with stakeholders before announcing their intentions to move to a harmonized sales tax.

Both provinces will have a harmonized tax as of July 1, 2010.

That will leave only Manitoba, Saskatchewan and Prince Edward Island as holdouts. (Alberta doesn't have a provincial sales tax and Quebec has a harmonized tax that is administered by the Quebec government).

Manitoba Finance Minister Greg Selinger said earlier this month his government is considering a single sales tax. No decision has been made.

The new tax would be collected by Ottawa, saving the province millions each year in administration costs. Businesses will see substantial savings from no longer having to collect and remit two sales taxes. Businesses will be able to get rebates for PST paid on input costs and capital investments, similar to rebates they already get on GST.

But by far the biggest hurdle to merging the two taxes is figuring out what to include. While basic groceries, medical supplies and prescription drugs are all sold without GST or PST applied, there are literally hundreds of goods and services in Manitoba to which only the GST applies.

Some, such as kids' clothing, books, and gym memberships, are exempt from PST for health and social reasons. Others are exempt for economic purposes, such as farm supplies.

But for most, the reason for the exemption isn't clear, including lawn-cutting services and taxi fares.

Ontario and B.C. both decided to continue to exempt kids' clothes, diapers and books. B.C. will continue to exempt gas while Ontario will not.

Both provinces will see consumers start paying PST on bicycles, newspapers and real estate commissions.

Winnipeg real estate agent Lorne Weiss, chairman of the political action committee of the Manitoba Real Estate Association, said adding PST to the fees paid when someone sells a home will add $700 to the cost of selling an average home in Winnipeg.

"The government has to start being a little careful," Weiss said. "If you keep attacking your golden goose, one day you're going to kill it."

Moore has already dropped off a package of information to Selinger advising him of the home builders' position on the HST. It included information on what Moore's industry thinks Ontario and B.C. did wrong and what would work best in Manitoba.

New homes are not exempt from GST -- although there is a new rebate homebuyers can apply for on new homes under $450,000.

If the seven per cent PST were added, the price of the average new home in Manitoba would rise by $13,600.

Both Ontario and B.C. took steps to offset the HST hit on new homes by offering rebates or reductions in the provincial portion, depending on the selling price.

Moore wants to ensure Manitoba does the same thing. He also wants Manitoba to include offsets to charging PST on housing renovations.

Dave Angus, president of the Winnipeg Chamber of Commerce, fears there will be a "dog's breakfast" of exemptions that would make harmonizing the taxes less effective.

"We need to simplify it," he said. "There are far too many exemptions."

 

mia.rabson@freepress.mb.ca

 

Republished from the Winnipeg Free Press print edition August 18, 2009 A4

History

Updated on Tuesday, August 18, 2009 at 11:05 AM CDT: Corrects sidebar: the terms "PST" and "GST" were previously reversed.

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