The cost of harmonization
The provincial Ontario budget is usually a sleepy affair, except in the odd years when new taxes are introduced. 2009 appears to be one such year. Major newspapers are reporting that Ontario is planning to harmonize the province’s 8 percent sales tax with the Federal GST. Ontarians can expect to pay extra taxes under harmonization for:
- New homes
- Mutual fund management fees
- Natural gas
- Heating oil
- Hydro
- Books
- Children’s clothes and shoes
- Meals under $4
- Diapers & feminine hygiene products
- Accountant fees, lawyer fees, consulting fees etc.
Feel free to add to the list in the comments. Canadians in other provinces will be affected by this move as well because mutual funds will now pay extra taxes on their MER. If a mutual fund charges a MER of 2 percent, harmonization will add 0.15 percent in extra taxes. I’m not sure if mutual funds passed along the 2% cut in the GST to clients but you can be sure that they will pass on this extra tax to investors.
[Update: The original post listed "Used cars purchased privately" but as Al points out in the comments private car sales attract the PST; not the GST.]
Related Reading:
- Bear Market Outperformance, eh?
- Manulife IncomePlus: The high cost of peace of mind
- Low-Fee Mutual Funds
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Filed under: Finance, Money Saving Ideas
