The concept of a multistage value added tax is to refund tax paid at every stage of a business cycle and ultimately impose the tax on the end user.
By implementing a multi stage VAT at the provincial level, the goal is to reduce the costs of imbedded taxes to businesses and reflect these savings in the cost to the end user.
However, by eliminating the provincial tax which excluded services and implementing at goods and services based tax, it’s estimated that 17% of consumer expenditures will be subject to provincial tax under the HST that were not subject to RST.
There will still be no provincial portion of sales tax on prepared food and beverages under $4.00. A ticket to a hockey game that used to subject to 15% tax (5% GST and 10%PST) will now only be subject to 13% HST, however the beer at the hockey game will be subject to 13% HST plus other fees and taxes to be announced.
This week the Ontario government released a handy table that compares common examples of products and services, with the GST and RST rates before July 1st and the HST rate afterwards. This table can be found at:
