In a paper written by Michael Smart and released by the University of Calgary it has been determined that the Harmonized Sales Tax implemented in Ontario had less of an effect on consumer’s wallets than expected.

The introduction of this tax reform was widely debated among consumers, politicians and businesses with many arguing that the consumer would take much of the burden.

The paper acknowledges that HST did cause some consumer prices to increase, but that the reduction in taxes paid on business inputs has offset those increases, with the overall impact increasing prices by just 0.6%. Professor Smart concluded that “about two-thirds of new input tax credits are already reflected in lower consumer prices” and that the “net impact of the reform for most families by the end of 2010 was a gain or very small loss in after-tax real incomes.”

The most promising finding in Professor Smart’s report is that more benefits are expected as businesses will continue to adjust and pass those savings onto consumers, “So the impact on after-tax real incomes will likely continue to improve over time.”

Feel free to pass this information along to friends and family who may find it useful, and as always please feel free to contact me with any questions about the Barrie real estate market.

Sincerely,

Peggy Hill

Peggy Hill & Associates Realty Inc., Brokerage

Office: (705) 739-4455