If one reads the Ontario - Canada Comprehensive Integrated Tax Coordination Agreement (the "HST Agreement") signed by Minister Dwight Duncan, it is clear that there is more room for point of sale (POS) rebates. Point of sales rebate means the 8% provincial component of the HST is not payable.
Article 3 of Annex B of the HST Agreement provides:
Where the Province advises Canada of its desire to designate particular property or services as items eligible for a PVAT-POS Rebate in respect of the Province effective on and from a particular day, the Parties agree that the Province will be permitted to designate those property and services as such items if the total value, as determined by Finance (Canada) in consultation with the Province, of all such items that would be eligible for a PVAT-POS Rebate in respect of the Province immediately after the particular day (including the particular property or services) and that were supplied in the Province during the last calendar year for which the GST Base in respect of the Province has been determined, in accordance with Annex “A”, does not exceed 5% of that GST Base.
What this means is that Ontario may grant point of sale rebates (called "POS") in respect of the provincial component of the HST (called "PVAT"). “GST Base” is defined in Annex B to mean "in respect of the Province for a calendar year means the estimated tax base under the harmonized sales taxes for the Province in the calendar year, as determined by Finance (Canada) pursuant to Formula D of Annex “A” (referred to in that Annex as “PROVBASEt”)." I won't complicate things further by going through Formula D.
Ontario granted a very small number of POS rebates:
• children’s clothing and footwear
• children’s diapers
• children’s car seats and car booster seats
• feminine hygiene products
• printed newspapers
• prepared food and beverages sold for a total consideration of $4 or less
There is a lot of room for more POS rebates. Tim Hudak has promised if elected October 6th to negotiate a POS rebate in respect of hydro and home heating. British Columbia negotiated that one from the very beginning.
In this blog, I have the luxury of making my own recommendations. My first recommendation would be for a POS rebate on healthy prepared meals such as salads (the salads I buy cost more than $4.00). I also think that bicycles and accessories should not be subject to PVAT (there was an exemption under the Retail Sales Tax). To promote Ontario culture, family outings and tourism, I think the former retail sales tax exemption for admissions to small theaters should reappear as a POS rebate. In my view, vitamins should be the subject of a POS rebate.
In addition, Ontario should determine whether more transactions involving hospitals, nursing homes health care and education can be the subject of a POS rebate. The HST on these items that require government funding should be reviewed because it is an area of government spending that can be reduced without negatively affecting service.
I could go on, but I will receive many negative partisan comments if I do. As a taxpayer who knows about HST, I feel that more POS rebates and relief could have been granted from the beginning. The McGuinty Government chose what POS rebates to grant or chose not to grant many rebates. Given the insignificant coverage of the POS rebates in the current CITCA, they chose tax revenues over using their POS bandwith.