Books, diapers, children’s clothing and footwear, children’s car seats and car booster seats, and feminine hygiene products. All exempt from the provincial portion of the proposed harmonized sales tax (HST) due to take effect July 1, 2010. But the 13 per cent (8% PST + 5% GST) will be applied for the first time on things like homes of more than $400,000, heating fuel, gasoline, tobacco, taxis, golf green fees and landscaping, newspapers and magazines, gym membership, veterinarian fees, vitamins.
And quite possibly the government may reinstate the PST on bicycles and safety related equipment.
On December 1, 2007, bikes with a price tag of less than $1,000, bike helmets and select bike safety equipment became exempt from the Ontario Provincial Sales Tax (PST). The Bicycle Trade Association of Canada (BTAC) estimated that the tax exemption would save consumers $25 million per year. BTAC expected that this move by the Ontario government would get kids more active, as well as encourage others to spend more time outdoors, while easing congestion on the roads.
Later, the tax exemption was extended until December 31, 2010. “Now the province has announced that it will adopt a harmonized sales tax (HST), and the fate of this exemption is unclear,” said BTAC in a statement released Friday. “One possibility is that Ontario will begin taxing bikes and related safety equipment in 2010 as planned. In that case, the Bicycle Trade Association of Canada (BTAC) has some suggestions.”
“First of all, we need the government of Ontario to clarify its plans,” said Usman Valiante of BTAC. “If the intention is to reinstate full taxation on bikes, Ontario cyclists will want to see that money go to cycling infrastructure and programs.”
Cycling, Valiante points out, is unequivocally the healthiest, cheapest and most environmentally friendly means of transportation available. Ontario stands to reap significant benefits from building a bike-friendly province.
BTAC is calling on the government to allocate provincial tax revenues directly to municipal cycling infrastructure like bike lanes, bike lockers and bike racks on buses. BTAC also favours corporate tax concessions for private sector companies that undertake cycling related capital investments – installing bike lockers and showers, for instance.
“Cycling provides clear and measurable benefits to individuals, the province and the environment,” said Valiante. “We need to put money behind facilitating and nurturing a strong bike culture in Ontario.”
At Friday’s press conference at Queen’s Park, Ontario NDP leader Andrea Horwath said her party has been pushing the McGuinty Liberals to encourage alternative green transportation. That means cycling has to be a convenient, easy and affordable option. If the Liberals decide to remove the PST exemption for bikes and related equipment, Horwath believes that runs counter to their move towards a greener Ontario.
“Harmonizing the PST with the GST means you’re going to be paying 8 per cent more on a wide range of goods and services,” said Horwath. “This tax grab won’t create green alternative transportation or healthy active lifestyles. And New Democrats are calling on the cancellation of the HST across the board.”
Beyond that, the NDP wants to see the government take a more active role in encouraging cycling by funding municipal cycling infrastructure that makes roads safer for cyclists and by creating a vision for the growing bicycle tourism industry.
“We’re picking on the people at the bottom of the food chain, the people who really can’t afford to pay the taxes,” said Joe Hill, senior olympian cyclist who rode from Guelph to Toronto for today’s press conference.
“They’re the ones that have the $500 bikes.”
But the opposition to the HST goes beyond dollars and cents. After all, the PST on a $500 bike is only $40. And most cyclists don’t even know that bikes are PST exempt. The real issue is the mixed messages being sent by the Liberals. While they’re trying to encourage people to adopt healthy lifestyles and green transportation alternatives, they’re also considering increasing a cyclist’s yearly operating costs.
While the NDP sees the HST as a tax increase for consumers, the Liberals argue that the HST is revenue neutral because they’re sending rebate cheques to families with a combined yearly income below $160,000 which will be paid for through transfers from the federal government. Even though the provincial government says overall revenues won’t increase as a result of this reform, the Liberals say a single tax will make Ontario more competitive and cut paperwork costs for business.
For some time, the federal government has pressured Ontario to harmonize its sales taxes as it already applies in Nova Scotia, New Brunswick and Newfound and Labrador. By doing so, the Liberals shift the burden of taxation from corporations to consumers. In fact, federal Finance Minister Jim Flaherty “has long argued that the harmonized sales tax cuts costs for businesses and can help boost job creation.”
Canwest News Services also reported on Monday, March 30, 2009 that Finance Minister Jim Flaherty said: “I think this is very good economic policy. This is a massive tax cut, a $5 billion tax cut for businesses in the province of Ontario and that means job creation and investment in the province of Ontario. So, this is very good economic policy over time.”
Urbane Cyclist Co-op worker Reba Plummer thinks that the government should be encouraging bicycling – not penalizing people for using their bikes. In fact, Plummer said the Urbane Cyclist believes that the PST exemption should be expanded to cover all bikes and human powered vehicles including tricycles, adult tricycles, recumbents, cargo bicycles, cargo trailers and children’s trailers so that people can use their bicycles to move goods and people around the city.
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