How does the HST work?
The fact is, Ontario’s former tax structure that included the Provincial Sales Tax (PST) hurt job creation. Previously, the PST was charged on most purchases made by businesses in manufacturing goods and providing services. It penalized business by generally taxing them at every step in the production, distribution and retail processes – making the PST a tax on a tax on a tax. The PST resulted in about $4.5 billion in embedded taxes, hidden in the cost of doing business in Ontario. It drove up costs to consumers and was a big disadvantage to Ontario’s businesses. Most countries we compete with for jobs don’t have that disadvantage. The HST removes this hidden tax by refunding sales taxes paid on most business inputs. These refunds mean lower prices for many consumer purchases and lower business costs, which experts agree will result in increased business investment, more jobs and higher incomes.
