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Harmonized Sales Tax – HST

Definition

The harmonized sales tax is a consumption tax in Canada. It is used in provinces where both the federal goods and services tax and the regional provincial sales tax have been combined into a single value added sales tax.

Harmonized Sales Tax - HST

What is 'Harmonized Sales Tax (HST)'

A Canadian tariff scheduled to be implemented on July 1, 2010, that combines the federal goods and services tax (GST) with the provincial sales tax (PST). According to the C.D. Howe Institute, a Canadian public policy organization, the HST is primarily an attempt to build a more efficient tax system, and not to increase sales tax revenues. Proponents believe that replacing the cumbersome provincial sales tax (PST) with a one-time, value-added tax will benefit consumers by simplifying the tax system and eliminating some of the current disincentives that many producers face.

Explaining 'Harmonized Sales Tax (HST)'

The notion of a harmonized sales tax is nothing new. In 1991, the province of Saskatchewan, under the Progressive Conservative government of Premier Grant Devine, combined its existing PST with the GST, a move that proved to be tremendously unpopular. In the general election that year, the New Democratic Party under Roy Romanow swept to a landslide victory, due at least in part to a pledge to reverse the "harmonization."



Apparently, little has changed on the public perception front. A 2010 Ipsos Reid poll, conducted on behalf of Canwest News Service and Global National, revealed that 82% of British Columbians and 74% of Ontarians opposed the government's plans to harmonize the sales tax.


Further Reading


British Columbia's Harmonized Sales Tax: A Giant Leap in the Province's Competitiveness
papers.ssrn.com [PDF]
… By harmonizing the 7% provincial sales tax with the 5% federal GST (except for some … than all other provinces except the three Atlantic provinces that have already harmonized their sales … would be consistent with Michael Smart's estimates of the impact of harmonization in the …

The effect of the harmonized sales tax on consumer prices in Atlantic CanadaThe effect of the harmonized sales tax on consumer prices in Atlantic Canada
www.jstor.org [PDF]
… By harmonizing the 7% provincial sales tax with the 5% federal GST (except for some … than all other provinces except the three Atlantic provinces that have already harmonized their sales … would be consistent with Michael Smart's estimates of the impact of harmonization in the …

An analysis of the impact of the Harmonized Sales Tax on provincial revenues in Atlantic CanadaAn analysis of the impact of the Harmonized Sales Tax on provincial revenues in Atlantic Canada
www.jstor.org [PDF]
… By harmonizing the 7% provincial sales tax with the 5% federal GST (except for some … than all other provinces except the three Atlantic provinces that have already harmonized their sales … would be consistent with Michael Smart's estimates of the impact of harmonization in the …

Consumer Impacts of BC's Harmonized Sales Tax: Tax Grab or Pass-Through?Consumer Impacts of BC's Harmonized Sales Tax: Tax Grab or Pass-Through?
www.utpjournals.press [PDF]
… By harmonizing the 7% provincial sales tax with the 5% federal GST (except for some … than all other provinces except the three Atlantic provinces that have already harmonized their sales … would be consistent with Michael Smart's estimates of the impact of harmonization in the …

The impact of sales tax reform on Ontario consumers: A first look at the evidenceThe impact of sales tax reform on Ontario consumers: A first look at the evidence
papers.ssrn.com [PDF]
… By harmonizing the 7% provincial sales tax with the 5% federal GST (except for some … than all other provinces except the three Atlantic provinces that have already harmonized their sales … would be consistent with Michael Smart's estimates of the impact of harmonization in the …

The impact on investment of replacing a retail sales tax with a value-added tax: Evidence from Canadian experienceThe impact on investment of replacing a retail sales tax with a value-added tax: Evidence from Canadian experience
www.jstor.org [PDF]
… By harmonizing the 7% provincial sales tax with the 5% federal GST (except for some … than all other provinces except the three Atlantic provinces that have already harmonized their sales … would be consistent with Michael Smart's estimates of the impact of harmonization in the …



Q&A About Harmonized Sales Tax – HST


What is the HST?

The Harmonized Sales Tax (HST) is a Canadian tariff scheduled to be implemented on July 1, 2010 that combines the federal goods and services tax (GST) with the provincial sales tax (PST).

Who will benefit from this change?

Consumers will benefit from this change by simplifying their taxes and eliminating disincentives for producers.

How does it differ from current systems?

It differs in that it replaces a cumbersome tax system with one-time value added tax.

What are some of the benefits of implementing an HST?

Some of the benefits include simplifying a cumbersome tax system and eliminating some disincentives for producers.