Ontario’s finance minister has announced that the province will match Ottawa’s tax holiday by eliminating its provincial sales tax on items that are not covered by existing provincial rebates.
Premier Doug Ford has expressed support for the tax break, and Finance Minister Peter Bethlenfalvy confirmed that Ontario will participate in the HST holiday.
Ontario has traditionally excluded the provincial portion of the harmonized sales tax from some items covered by Ottawa’s GST holiday, such as children’s clothing and groceries, but taxed alcohol and restaurant bills.
Bethlenfalvy stated that the provincial portion of the HST tax break will offer nearly $1 billion in additional relief for Ontario families.
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“The provincial government will align with the federal government’s two-month GST holiday by removing our portion of the HST from items that are not currently covered by existing provincial rebates,” Bethlenfalvy stated.
This decision comes after extensive discussions with the federal government on how to collaborate to advance Ontario’s priorities.
The HST rates in Ontario are 13 percent and 15 percent in the Maritime provinces.
New Brunswick and Prince Edward Island have requested compensation from Ottawa to offset their revenue losses due to the tax break, while Newfoundland and Labrador have not made such a request. Nova Scotia was in the middle of an election when the GST measure was proposed, which concluded on Nov. 26.
Deputy Prime Minister Chrystia Freeland has not disclosed whether Ottawa will provide financial compensation to HST provinces, but she has encouraged non-HST provinces to eliminate their own sales taxes during the same period to reduce the cost of exempted items.
Affordability Measures
Items exempted during the proposed tax holiday include groceries, restaurant meals, alcoholic beverages, and children’s items such as clothing, footwear, toys, books, and certain electronics. Christmas trees will also be tax-free.
Residents in HST provinces would experience greater savings, with families in Ontario, Nova Scotia, New Brunswick, Newfoundland and Labrador, and Prince Edward Island saving $260 on a $2,000 expenditure.
The Liberal government has introduced a standalone bill to implement the proposed GST holiday on Nov. 27. The bill must be passed in the House of Commons to take effect.
Bethlenfalvy has suggested that Trudeau borrowed the rebate idea from Ontario.
The Canadian Press contributed to this report.
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