Ch 3: The Role of Government in a Market Economy / Ch 4: Government in Canada

http://www.thestar.com/news/ontario/hst/article/738403

Summary
The article talks about the benefits of the harmonized sales tax. Critics explain that HST is not a major cash grab by the government, will scarcely affect consumers, and will greatly benefit businesses. Economists who have carefully studied the long-term effect of HST estimate that the increase in our cost of living is insignificant, by about 0.4%. They estimate the households with incomes above $100,000 will lose about $389 annually, which is very marginal. They also estimate that HST, creating about 600,000 new jobs over 10 years, will raise annual incomes by 8.8%. HST will stimulate businesses in B.C. and Ontario, making them more cost-competitive than before.

Connection
The article relates to our text, naturally, because it talks about taxes. HST is a direct tax imposed on consumers, making the end users, us, pay the 13% sales tax. Because it is a sales tax, it would use the ability-to-pay approach because if you can purchase something, you, of course, have the ability to pay. The harmonized sales tax is a great way to stimulate the economy and business in B.C. and Ontario. Businesses will be more cost-competitive, bringing many benefits to consumers also. The third-party effects are to attract new foreign investors in the HST provinces.

Reflection
I never understood why there were so many people that violently opposed HST. There are many studies done that show the positive long-term effects of HST, as seen in the article. So many people oppose HST because they do not understand the concept. Although we will be paying the full 13% sales tax, we can achieve lower retail prices and stimulate businesses to create more jobs. As said in the article, economists speculate that it will not greatly affect the lifestyles of people. For the majority of people, their cost of living will only increase by a marginal 0.4%. I don’t believe that an insignificant figure like that should cause an uproar in the province.