HST on Alcohol Is Cascading Tax
Robert Benzie of the Toronto Star has written a good article "HST will lower tax on booze, but the price is going up" about the decrease in sales tax on alcohol that will accompany the implementation of harmonized sales tax (HST) on July 1, 2010 and the counter-balancing increase in fees that result in net price increases. He makes a number of important points:
- The current Ontario retail sales tax on alcohol is 12% or 10%
- The HST rate will be 8% (a decrease of 4% or 2%)
- The LCBO has quietly increased its mark-up by 7.5 per cent. On imported wines the mark-up has soared to 71.5 per cent from 64 per cent, and on domestic wines it has risen to 65.5 per cent from 58 per cent.
- The LCBO has a policy of “social responsibility” which prevents them from bringing prices down to a level which would encourage alcohol abuse
The LCBO mark-ups are government mark-ups because the LCBO is owned by the Ontario government. As a result, there is tax on tax --- and this is the problem.
The LCBO mark-ups are a tax. HST on alcohol would be applicable on the portion that is the LCBO fee. This is tax on tax.
Cyndee Todgham Cherniak is counsel to and in affiliation with the International Trade Law and the Tax Law (Commodity Tax
Sickening!
Via twitter RT @REToronto A very quite Friday, for a mid may I hear that there are going to be a lot of June 30/10 closings due to the new HST tax . Then what?