The word out of Queen's Park today, according to media reports, is that the Ontario Budget will contain provisions to harmonize the Provincial Sales Tax (PST) and the Federal Goods & Services Tax (GST). Obviously there are many details still to be announced in the actual Budget, but judging by the number of comments on the various media stories already, there will also be plenty of questions. In fact, someone titled rpm02 has already started a blog entitled HSTinOntario on Blogspot. Some of the questions will certainly pertain to the how the tax may be applied to gasoline.
I'm not going to speculate, but thought it would be worthwhile to share what the HST looks like in the provinces that already have a Harmonized Sales Tax (HST).
Where is the HST already applied in Canada?
Basically get on the Trans-Canada Highway, gas up in Sherbrooke, Quebec and head east. In New Brunswick, Nova Scotia and Newfoundland and Labrador, you'll pay the HST on gasoline. All Canadians pay GST on gasoline. The HST simply means both the GST and the local Provincial Sales Tax are levied on each litre of gasoline. (Together in harmony, like Ebony & Ivory). In Quebec, the provincial sales tax is also levied on gasoline along with the GST, but they are seperate.
How do tax rates compare across the country?
Below is a chart put together by Natural Resources Canada that summarizes the 2008 average regular gasoline pump price in select cities. On average, each litre of gas purchased in Toronto included the Provincial Fuel Tax (14.7 cents per litre), the Federal Excise Tax (10 cpl) and the GST (about 5.2 cpl). Of those taxes, the first two are fixed amounts and not a percentage. Bottom line: for every litre of gasoline you purchased in Ontario last year, you paid about 30 cents in tax.
The chart below is good, but a little tough on the eyes, so let me try and explain. Start with the yellow box and work your way down. The yellow box includes the taxes each province applies to gasoline. In most cases, it's one fixed amount. The light green box represents the HST (combination of Provincial Sales Tax and the GST) and then the dark green box represents the Federal Excise Tax which is a fixed 10 cpl across the country. It looks different in some provinces on this chart because they added the GST and the Federal Excise Tax together to come up with one amount. Seeing as they both go to the same place, that makes sense.
Average Total Gasoline Taxes in Provinces with the 13% HST (2008)
- New Brunswick - 33.7 cents per litre
- Nova Scotia - 39 cents per litre
- Newfoundland & Labrador - 40.8 cents per litre
How much did you pay today?
I checked our handy Location & Price Finder on our corporate website and found the following. If you purchased 40 litres of gasoline this morning in Toronto, you paid about $11.50 cents in tax. In Halifax, you would have paid about $14.28 in tax on 40 litres and in Saint John, NB you would have paid about $12.24 in taxes. You can see on the chart that each province has a different fixed tax on gasoline, but the Harmonized PST & GST is pretty visible.
So if the HST was in place in Ontario today?
Obviously there are many details yet to be released, so this is just for fun. If nothing were to change, simply adding the 8% Ontario PST and applying it the same way as the GST is applied to today's pump price in Ontario would add 6.6 cents in tax to a litre of gasoline. That means a pump price of about 92 cents per litre today in Toronto rather than 86 cents...or about $2.64 more for that 40 litre fill-up.
It looks like there will be tax rebates for some households and exemptions on certain household essentials. We'll have to see exactly what it means for gasoline, heating oil and other fuels. But as someone who lives in Ontario and drives a vehicle big enough to fit my two kids, I wanted to take a preliminary look at the math. Hope you found it as interesting as I did.
Clearly there will be more details in the Budget and a transition plan of some sort. Check the Ontario Government website in the coming days or contact your local MPP for more details.
Photo Credit: Steve C Lemaire