Yes and no. If there was a PST exemption, there is no PST now and there is no exemption for things that were exempted under the provincial tax legislation. Indeed, there are clearly lots of things that are taxed by GST/HST that had no PST (most especially services and homes). However, there are lots GST/HST exemptions that match PST exemptions (like groceries) and even some that were not exemptions.

It is a very tricky business to determine what is exempt and what not. A large bag of potato chips is considered groceries (not GST/HST), a small bag is considered a snack (+GST/HST). And the regulations have not been drafted or approved yet so we can't really say for certain yet all that will be in and all that will be out.

Wasn't this also a major justification for the GST? I'm curious (as I was far too young at the time to notice), but did this actually happen? Was there a 7% drop in retail prices on GST taxable items, or did prices remain at the same level and retailers just made a further 7% profit on those items?

One further question – does this mean that items that are currently PST exempt will now be taxed in full? Doesn't this include some pretty significant things like food, clothes, prescriptions, and electricity?

You are correct about the setting of rates. That is an agreement reached between Harper/McGuinty, Harper/Campbell, but the amount the agree on is collected by the feds and passed on to the provinces.

You are also right that many things that currently don't get taxed will now be like new homes (now 5%, next year 13%) and services. At least they don't currently get directly taxed. They are taxed, the materials used to build the home is taxed, but now those taxes won't be hidden and built into the final cost of the home.

But I don't think it is accurate to say that it is just administrative streamlining and nothing is ceded. This is now federal legislation which means exceptions, carve outs, interpretation, bulletins, rulings, prosecutions and enforcements, amendments, etc. are all now within the federal pervue.

Having said that about collections and the setting of the rates, the provincial government has indeed ceded governance over this tax to the federal government.

The HST is a federal tax enacted under federal legislation (amendments to the Excise Tax Act) that Harper would introduce. The federal government therefore decides on all policy, enforcement and interpretation matters (like what is included/excluded, how a good or service gets categorized under the regulations, etc.). They collect but they also keep all fines and late payment interest.

I don't know enough about Ontario's economy to say which way this balances out right now.. but I do know that as our material needs are fulfilled, service and knowledge based economies come to the fore.

It leads to increased investment and a booming economy … of
which the Atlantic Provinces are a prime example. (:

Does it not seem like a particularly motivated Federal Gov't (say one with an exceptionally strong Majority) could conceivably withhold that money in the guise of paying down a deficit (for example)?

It seems, on first blush, that the Provincial government is ceding a fairly important power of taxation for no real reason (I suppose this is where the $4.3B in compensation comes into the picture)

Am I reading this right?

"Harmonized" is in my view a bit misleading because one of the two taxes is actually eliminated. Harmonized sales tax means there will be no more provincial sales tax but the GST is increased by 8% and that amount is passed back to Ontario. So the GST regime – with taxes on services that we don't have in Ontario, but also the flow through that makes taxes more efficient and ultimately lower – is adopted as the sole tax on sales of goods and services in the province. There is also only one collection and enforcement bureaucracy. While on some goods and on all services, more tax is being paid, the overall tax burden (as the argument goes) does not change that much.

We also have, in Ontario, an 8% provincial sales tax. This is only on goods but it is taxed on each purchase, there is no flow through or input tax credit (simplifying a bit here).
[CONT...]

*Heck I immediately think Hunter S Thompson when I see the initials HST ;)

No matter what topic gets inserted in place of "the tax", the sentence still rings true!

Or is that enough semantic distinction so that the Haper supporters heads don't simply implode on the cognitive dissonance?