# HST or not?



## Andre112 (Apr 27, 2011)

BC is having a HST referendum vote.

I really hated HST because so many things were only taxed 5% now 12% like strata fee, restaurant dining, golf green fee ... etc
My wallet definitely got thinner after BC implemeted HST, but in the long run, will it turn out to be a better tax than GST+PST? 

I know corporates benefit from it because HST paid can be claimed back like GST before but PST can't. So PST is added on at each level of distribution of products. 

People who live in provinces with HST, can you comment?


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## andrewf (Mar 1, 2010)

Given that governments need revenues to pay for the services they offer, I'd rather they be raised through relatively benign taxes. HST is one such tax. So, I support it over a return to a sales tax.


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## ghostryder (Apr 5, 2009)

Income taxes discourage / punish people from / for working, saving & investing.


Theoretically consumption taxes should restrain consumption, but in practice they have only a negligible effect unless the rate is really, really high. Other factors have far, far more influence on consumption.

And as you noted, there are no input tax credits for PST, so the multiple application of PST is ultimately embedded in the cost of goods.


More HST, less income tax please.


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## nathan79 (Feb 21, 2011)

HST is great in theory, but the government isn't fooling anyone when it comes to their true motives. They will throw about catch phrases such as "good for business" and "savings will be passed on to the consumer", but in reality it's all about increased revenue because government is broke.

If fairness or revenue-neutrality was the goal, then a good start would be removing HST from the following goods/services:

Restaurant meals - I assume they are taxed for the restaurant's labour in preparation, but packaged/ready-made foods in the supermarket were prepared in much the same way, and are not subject to taxation. Why the double standard? In addition, not everyone is able to cook a meal at home every day, so why punish people for that?

Repair services - if an appliance breaks down, or you need a plumber, those are important services and you should not be penalized for having such repairs done.

Used goods (especially vehicles) - the tax was already paid once when they were new.


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## kcowan (Jul 1, 2010)

We're going to vote NO. Businesses have already switched. It will be very expensive to switch back. I hate the way it was implemented but I will vote against the government during the next election, not the tax.


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## HaroldCrump (Jun 10, 2009)

I don't know how the HST implementation and rates in BC are different than ON, but in ON the HST has been nothing more than a tax-grab, IMO.
Esp. the adding of HST to hydro and gasoline prices.

I may have been ok with it had the overall rate been set slightly lower than the previous GST + PST rate of 13%.
So maybe like 10% - 11%.

Had the federal govt. not cut the GST by 2% back in 2006, we would have been paying 15% taxes on anything we dare to touch.

And the effect on gas and hydro prices has been absolutely atrocious.
It has essentially been a ploy to enrich the provincial govt. so that they can continue their drunken tax-and-spend policies and make secret deals and do special favors for targeted interest groups.

If there were a vote on the HST in Ontario, I would have voted a big NO.

And yes, I will be voting against the govt. in the upcoming elections 4 months from now.


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## andrewf (Mar 1, 2010)

Nathan, you are absolutely right about HST on used items. It was added as a sop to the new car industry, for 'fairness'.

You're dead wrong about restaurant meals and repairs. Food is exempted because it is a necessity. Restaurant meals are a luxury, so the same argument does not hold. Your argument, if anything, suggests that we should apply HST to more goods to avoid distortion (food, etc.).


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## andrewf (Mar 1, 2010)

Harold, not to beat a dead horse, but you claim the HST is a tax grab to enrich the provincial government. Can you please explain why the government then decided to cut other taxes, such as personal and corporate income taxes, by more than what the HST will bring in? That seems like a very bad way of grabbing taxes and enriching the provincial treasury to me.

So, if that was not the motive, I'm inclined to think it had more to do with improving Ontario's tax competitiveness by shifting our tax burden--not increasing it.


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## Andre112 (Apr 27, 2011)

I agree with ghostryder and nathan.

HST "system" is better than GST/PST, but I don't agree with what's being taxed. Things that's been taxed once shouldn't be taxed again unless I can claim it back.

Now there's this,
http://www.news1130.com/news/local/...to-restore-old-pst-gst-system-if-hst-rejected

Even if HST is revoked, things were PST-exempt might not be anymore


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## Charlie (May 20, 2011)

I have three main objections to the PST.

1) It's arbitrary, inconsistent and complex. And potentially devastating to small business. A local newspaper faced hundreds of thousands of dollars in potential assessments over the definition of whether musician announcements were considered editorial or advertising. I had two colleagues, in the same industry, doing the same thing undergo audit. One won. One lost. They did the same thing. They used the same arguments. They had different auditors. There was no 'aggressiveness' intended. The definitions were just that vague. The cost to continue the fight became prohibitive. The definitions in the tech industry are completely out of date. The rules for carpenters who do some 'on site' work, and some shop work are beyond impractical. 

2) It's asinine to have two separate tax systems, with separate rules, administration, enforcement, reporting and interpretations, both taxing the purchase of goods and services. 

3) There's certainly a global trend away from PST- type taxes and to Value Added Taxes. I don't necessarily buy the 'if it's good for business it's good for us' argument, but I do like the KISS mandate. And sometimes going with the crowd is a good thing.

That said...the HST absolutely is an increase in tax for consumers. Which is why they should have reduced the rate in Ont and BC when implemented instead of jiggling with refundable credits, and personal tax adjustments to mask this. (BC has begrudgingly promised to do so -- likely too late to save the tax).

And I really hate the BC referendum. It's not the way to set tax policy. We elect people to do this stuff for us...and if they screw it up, they should be booted from office. But an American Idol type poll based on sound clips and emotion is just crazy. Thank you Gordon Campbell. Grrrrrrrr.


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## LondonHomes (Dec 29, 2010)

HaroldCrump said:


> I don't know how the HST implementation and rates in BC are different than ON, but in ON the HST has been nothing more than a tax-grab, IMO.
> Esp. the adding of HST to hydro and gasoline prices.
> 
> I may have been ok with it had the overall rate been set slightly lower than the previous GST + PST rate of 13%.
> So maybe like 10% - 11%.


The HST is not a tax grab, it was part of a package of tax changes that where made which included an income tax reduction.

So instead of an HST rate reduction you have an income tax rate reduction, which as other posted have mentioned is better tax policy.


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## Jungle (Feb 17, 2010)

I think what feels like a tax grab are the things that are taxed more now, due to the HST. For example fuel. 

I've noticed that food has gone up in price and I wonder how much of that was caused by HST being charged on fuel used transport food. People say food is not effected, well I think it was. 

We did deposit our $1000 HST transition cheques into our mortgage and TFSA. We got back a little more refund with our taxes, which I suspect could be from the lowing of income tax rates. 

My wife cuts my hair now for free (now increased because of HST) after watching a couple of youtube videos and I ride my bicycle to work when my wife is using the metropass. However her haircut is bloody expensive and 13% tax makes it worse.


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## nathan79 (Feb 21, 2011)

Andrew, I certainly agree that food is a necessity, but that still makes me wonder why prepared foods are only taxed in some locations but not others. My personal stance is that food should never be considered a luxury, so should not be taxed anywhere. Just my opinion and I'm sticking to it.

Whether or not you agree, removing the tax from meals is at the very least an affirmative step the government could have taken. Instead, the HST will probably fail in BC, since they could not come up with any compelling reasons to make people consider keeping it. That will be a shame, since many things about the HST are good.


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## LondonHomes (Dec 29, 2010)

Jungle said:


> I think what feels like a tax grab are the things that are taxed more now, due to the HST. For example fuel.
> 
> I've noticed that food has gone up in price and I wonder how much of that was caused by HST being charged on fuel used transport food. People say food is not effected, well I think it was.


Food prices are up because of the increase in commodities. Take a look at the price increase of flour, pepper & garlic to name a few.

Not to mention food companies are introducting more Healthy & Low Salt opinions. Salt is cheap when you remove it needs to be replaced with something which will be more expensive. 

The transport company claims back from the government any HST it has paid on Fuel, unlike the PST which it had to eat.

So under the HST it is actually cheaper for the transport company to deliver food.


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## andrewf (Mar 1, 2010)

nathan79 said:


> Andrew, I certainly agree that food is a necessity, but that still makes me wonder why prepared foods are only taxed in some locations but not others. My personal stance is that food should never be considered a luxury, so should not be taxed anywhere. Just my opinion and I'm sticking to it.
> 
> Whether or not you agree, removing the tax from meals is at the very least an affirmative step the government could have taken. Instead, the HST will probably fail in BC, since they could not come up with any compelling reasons to make people consider keeping it. That will be a shame, since many things about the HST are good.


So caviar is not a luxury?

A restaurant meal is a service. Most of the value is added in preparing and serving it to you, not the raw food inputs.


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## Karen (Jul 24, 2010)

> And I really hate the BC referendum. It's not the way to set tax policy. We elect people to do this stuff for us...and if they screw it up, they should be booted from office. But an American Idol type poll based on sound clips and emotion is just crazy. Thank you Gordon Campbell. Grrrrrrrr.


Shouldn't you be saying, "Thank you, Bill Vander Zalm" - it was his actions that led to the referendum.



> I've noticed that food has gone up in price and I wonder how much of that was caused by HST being charged on fuel used transport food. People say food is not effected, well I think it was.


Although I intend to vote "no" to extinguishing the HST, I understand the views of those who will vote "yes," but I hate to see people assess the HST based on inaccurate information. Anybody who keeps in touch with what's going on in the world must have noticed the heavy media coverage of the serious concern about rising prices for food all over the world. In fact, according to the media, Canada has so far fared significantly better than most other countries in that regard, so it can hardly be blamed on the HST.

I sometimes shake my head in disgust when I hear ignorant callers to radio talk shows complaining that they now have to pay 12% HST on things that have been subject to PST and GST (12%) for years, without their being conscious of it. I've heard many calls like that, showing that those people have made their decision on how to vote without having enough facts to make an informed choice. They're planning to vote against the HST to voice their resentment about the way it was brought in. Those are two separate issues and should be treated as such. It's a perfectly valid choice to vote in favour of retaining the HST and register your objection about the way it was brought in by voting against the Liberals at the next election.

I also believe that, whether one prefers the HST option or not, it's now a fact, and getting rid of it will cost a fortune and cause at least two more years of confusion and uncertainty for the business community. Have the anti-HST people really thought about the fact that restoring the PST will require not only the repayment by the province of the $1.6 billion payment owed to the federal government, that it will necessite the re-hiring of hundreds of provincial public servants, and that many small businesses that spent a lot of money converting their accounting/computer systems to the HST will have to pay to have them converted again. Have they also considered the possibility that our provincial income tax rates, which were lowered when the HST was brought in, might be raised again to make up for the loss of revenue? I haven't seen any discussion of that possibility, but it seems a likely scenario to me.


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## HaroldCrump (Jun 10, 2009)

andrewf said:


> Can you please explain why the government then decided to cut other taxes, such as personal and corporate income taxes, by more than what the HST will bring in? That seems like a very bad way of grabbing taxes and enriching the provincial treasury to me.
> 
> So, if that was not the motive, I'm inclined to think it had more to do with improving Ontario's tax competitiveness by shifting our tax burden--not increasing it.


I'm not against the HST in the sense of a single, harmonized tax.
Esp. since it eliminates several layers duplicate taxation that get added on the cost of the goods.
However, very few (if any at all) of the net result benefits that were touted have been realized.
Not one product has reduced in price because of the HST.
How many of the 159,000 jobs that were promised have been created so far?
The income tax reductions are good, no doubt, but have been more than offset by increases in other areas.

The worst impact has been on the gasoline and hydro prices.
This is a systemic campaign against the lifestyle constraints of some households, such as the TOU pricing and the punitive peak rates.

Just yesterday there was a debate in the Toronto city council about freezing TTC fares.
In other words, the rest of the taxpayers need to bear an ever increasing burden of subsidy to public transit.

Even without the HST, hydro and gas prices were bad enough but the HST has just killed the household budgets for so many people.

Guess what, the job creation plan just back-fired.
Now, many households will choose to buy cheaper, generic products, not eat out, reduce entertainment expenses, substantially reduce discretionary spending, etc.

I have been pretty frugal with my energy consumption, I think.
I have often posted my conservation results on the Energy Useage thread.
Inspite of that, my hydro bill has increased by over 35% because of the HST and the punitive TOU rates.

It goes on and on.
It's not just one thing.
If it were, I would (to use your favorite expression) - grin and bear it.
The taxation policy, combined with the corruption scandals, the rampant partisanism towards certain interest groups, secret deals, etc. has just about done it for me.


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## andrewf (Mar 1, 2010)

HaroldCrump said:


> The income tax reductions are good, no doubt, but have been more than offset by increases in other areas.


I'm pretty sure the net impact to the provincial treasury is negative, making this statement demonstrably false.



> The worst impact has been on the gasoline and hydro prices.
> This is a systemic campaign against the lifestyle constraints of some households, such as the TOU pricing and the punitive peak rates.


HST is secondary to other factors affecting these goods. 



> Just yesterday there was a debate in the Toronto city council about freezing TTC fares.
> In other words, the rest of the taxpayers need to bear an ever increasing burden of subsidy to public transit.


That's the prerogative of the city of Toronto. In the long run, fares are rising. Gasoline is priced daily, but transit fares see large jumps in prices periodically.



> Even without the HST, hydro and gas prices were bad enough but the HST has just killed the household budgets for so many people.


HST has added about a point of inflation. It has not been a cataclysm. 




> Guess what, the job creation plan just back-fired.
> Now, many households will choose to buy cheaper, generic products, not eat out, reduce entertainment expenses, substantially reduce discretionary spending, etc.


HST is not really about job creation. I know it was sold on that basis, but that's because the electorate views all econonic and fiscal policy through that prism because they don't understand the other considerations. HST is about reducing the marginal effective tax rate on new business investment. It was part of a program of tax changes to reduce that rate from about 50% down to 25%. Now, that won't cause an overnight boom in investment, but it will serve to attract more investment to Ontario, capital accumulation, and increased productivity. Increased productivity leads to higher wages. That is the benefit, not necessarily more people working (under that rubric, we see it as a good thing that grannies in their 80s are manning the coffee counter at Tim Hortons or donning the blue smock to greet people at Walmart).



> I have been pretty frugal with my energy consumption, I think.
> I have often posted my conservation results on the Energy Useage thread.
> Inspite of that, my hydro bill has increased by over 35% because of the HST and the punitive TOU rates.


So, a 35% increase on a small bill is a small bill? I don't understand this argument. I don't drive very far to work, so I don't buy much gas. Does that mean I should be able to buy gas at 70 cents a litre like a few years ago? Does not compute.



> If it were, I would (to use your favorite expression) - grin and bear it.
> The taxation policy, combined with the corruption scandals, the rampant partisanism towards certain interest groups, secret deals, etc. has just about done it for me.


McGuinty has done plenty of crappy things. The tax reforms is one of the best things he's done. We should rag on our politicians for the stuff they did wrong, not the stuff they did right!

By the way, ask your guy Hudak whether he'll be scrapping the HST and reverting to PST. You'll be disappointed. Hudak is also promising to allow everyone to get a discount on hydro. He'll most likely break that promise, but if he doesn't, he'll just reach into your other pocket with higher taxes or borrow that money from your kids. Ontario has some serious fiscal challenges. Let's not do stupid stuff like borrow money to encourage people to waste electricity.


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## HaroldCrump (Jun 10, 2009)

andrewf said:


> That's the prerogative of the city of Toronto.


Sure, but just don't come to the provincial govt. with cap in hand, asking for the rest of the province to subsidize their transit.
Anyhow, this freeze plan may not even materialize.
But it just goes to show how every group has a sacred cow and you can't touch it.



> So, a 35% increase on a small bill is a small bill? I don't understand this argument. I don't drive very far to work, so I don't buy much gas. Does that mean I should be able to buy gas at 70 cents a litre like a few years ago? Does not compute.


No, that was not my intention.
It's about percentages.
Whether my bill is $30 or $300 doesn't change the fact that 35% hike is punitive.
Esp. for someone who's already quite lean in consumption and can't cut more without compromising quality of life.
Same for regular drivers dependent on gasoline.
Yeah, throw them under the bus because they are evil people polluting the planet and killing the baby seals.
So let's make sure they pay through the nose for gasoline so that they'll start taking transit and save the planet.

If HST was supposed to streamline everything and remove redundant taxation on goods and services, why wasn't the provincial gasoline tax removed upon implementation of the HST?



> By the way, ask your guy Hudak whether he'll be scrapping the HST and reverting to PST.


He didn't say that.
All he said was he'll make hydro HST-exempt.


> Hudak is also promising to allow everyone to get a discount on hydro.


Well, what he actually said is any household can opt for either TOU pricing or flat pricing.

For some it may be a discount and for others not.
The flat rate is has increased a lot, too, since 2009 so overall everyone pays more.
_That_ increase is at least not HST, but that's another topic (green energy and FIT program, etc.)


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## ghostryder (Apr 5, 2009)

Jungle said:


> I think what feels like a tax grab are the things that are taxed more now, due to the HST. For example fuel.
> 
> I've noticed that food has gone up in price and I wonder how much of that was caused by HST being charged on fuel used transport food. People say food is not effected, well I think it was.



What HST? Effectively there is no HST on the fuel used to transport groceries.

The apple or bread you buy in the grocery store is zero-rated. Any HST paid on expenses to get that apple or bread to the store is an input tax credit for the person/business paying the expense. So no HST is paid by anyone in the supply chain, including you (unless they are not registered for GST/HST and therefore cannot claim ITC's).


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## ghostryder (Apr 5, 2009)

nathan79 said:


> If fairness or revenue-neutrality was the goal, then a good start would be removing HST from the following goods/services:
> 
> Restaurant meals - I assume they are taxed for the restaurant's labour in preparation, but packaged/ready-made foods in the supermarket were prepared in much the same way, and are not subject to taxation. Why the double standard? In addition, not everyone is able to cook a meal at home every day, so why punish people for that?



There are plenty of packaged/prepared items at the grocery store that are subject to GST/HST just as restaraunt meals are.




nathan79 said:


> Repair services - if an appliance breaks down, or you need a plumber, those are important services and you should not be penalized for having such repairs done.


I'm sure you can rationalize exempting just about anything. The problem is that the more things you exempt the higher the rate has to be on the remaining taxable items/services. Far better to have the widest base and a lower rate.



nathan79 said:


> Used goods (especially vehicles) - the tax was already paid once when they were new.


Agreed. A used car should not be taxed again except when the previous owner is registered and claimed an ITC on it, since effectively no GST/HST was actually paid. Then they are required to collect GST/HST when they sell the vehicle, just as they would for any other business asset.


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## nathan79 (Feb 21, 2011)

Yes, I'm definitely in favour of a higher HST rate, applied to fewer items. A cell phone is a luxury, a TV is a luxury, jewelery is a luxury, etc. A rate around 15% on those items would be fine to me if it meant fewer things would be taxed.


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## Jungle (Feb 17, 2010)

For here anything that comes premade or is premade in the grocery store has HSt. Chips, granola bars, premade fruit trays, etc. 

It was kind of silly seeing HST added to electricty bills and then premier dad gives a 5% discount back on the bill.


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## carverman (Nov 8, 2010)

ghostryder said:


> Agreed. A used car should not be taxed again except when the previous owner is registered and claimed an ITC on it, since effectively no GST/HST was actually paid. Then they are required to collect GST/HST when they sell the vehicle, just as they would for any other business asset.


Used vehicles have always been cash cows for both levels of govt.
Toronto(until recently) had an additional vehicle local tax that was paid
on plate sticker renewal.

Up until implementation of the HST in Ont, used vehicles were only
taxed on PST based on bill of sale, or failing that the blue book value,
now with the HST..Harper gets an additional 5% cut off each sale.

Whether it makes sense or not, used vehicles, if they are used on the road
and need to be registered with the province will be taxed. Thats a big
chunk of govt revenue!


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## carverman (Nov 8, 2010)

Jungle said:


> It was kind of silly seeing HST added to electricty bills and then premier dad gives a 5% discount back on the bill.


Premier Dad, is very generous to give us a 5% kickback on the hydro bill,
(energy consumption) but with all the other regulatory charges and HST
on everything, its eroded considerably..but from a political standpoint, he
is appearing to be sympathetic with increases in TOU billing.


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## HaroldCrump (Jun 10, 2009)

The 5% is temporary...it will end.
Numbnuts tinkered with the TOU slots and had the off peak start at 7:00 pm but at the same time increased the off peak rate.

So between the 5% discount, increasing the off peak rate and the change of TOU time slots, the net result is still a substantial increase, which was the intent anyway.


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## LondonHomes (Dec 29, 2010)

HaroldCrump said:


> Numbnuts tinkered with the TOU slots and had the off peak start at 7:00 pm but at the same time increased the off peak rate.


Of course they would need to increase the off peak rates.

The entire system needs to recover the same amount of money to pay for the cost of the electric system.

The only way to get lower rates is to subsidize it with tax money.


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## carverman (Nov 8, 2010)

LondonHomes said:


> Of course they would need to increase the off peak rates.
> 
> The entire system needs to recover the same amount of money to pay for the cost of the electric system.
> 
> The only way to get lower rates is to subsidize it with tax money.


I think the Ont Hydro boondoogle is more complicated than that.
Look at the breakdown on your hydro bill to see different revenue streams
being billed. 
Breakup of the old and inefficient Ont Hydro has resulted in some ways a
"free for all" revenue and tax grab..thanks to McGuinty/Harper.

When you consider the hundreds of megawatts that the province of Ontario
consumers, you can easily deduce how much revenue is coming from
the HST portion of the hydro bill. The TOU rates were an attempt at
trying to get consumers to reduce their consumption by jacking up the
daytime rate..when everyone is using the electricity the most.

So in a way, the old principle of supply and demand plays a great part
in this scheme. During the daytime when the demand is the greatest,
you pay more. Where that extra 4 cents per kwh goes is anybody's
guess..into somebody's pocket. The cost of generating a kwh from
the old established legacy hydro dams is less than a ONE TENTH OF A 
CENT per kwh. I'm trying to find numbers for the nuclear generation,
which will be a bit higher..but someone (including the provincal gov't
and others)have discovered that there is "gold" in electricity...because
just like gasoline, home heating, it is a commodity that no one can
be without..unless you have the financial resources (and south facing
property roofs) for a solar setup $64K investment for 9.2kw system,
under the current microFIT program...and the rates are about to
change on that as well. 

BTW..Andrea Horwath (leader of the Ont NDP) has announced her
election platform now. 

She promises to remove the HST from gasoline, and home heating and electricity,
I believe, but this is only the PST portion as the GST would still
apply unless the Feds give her the mandate to remove that as well. 
http://www.theglobeandmail.com/news...-to-create-utopia/article2076498/?from=sec368

She also is promising a balanced budget with all this tax relief by 2017.

Hudak is promising a balanced budget by ???

http://www.theglobeandmail.com/news/politics/the-mathematically-challenged-tim-hudak/article2069593/


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