By Ernie Hardeman, PC ag critic

On March 26, as part of the 2009 budget, the McGuinty government announced big changes to the way our sales tax system works. The new Harmonized Sales Tax (HST) combines the PST and GST into a single tax of 13%. While this sounds like a small change it may have a major impact on the way you do business and the amount of tax that your family pays.

The HST will apply to all items that were subject to GST – this means that hundreds of items that previously didn’t have provincial sales tax will now have an 8% tax increase. This includes everything from home heating fuel, postage stamps, home repair services, to your morning coffee at Tim Horton’s. Some of the increases – such as gas for your car – will be particularly hard on rural and farm families.

The government is offering one time cheques but for many families this will only cover the increased cost for the first year – leaving Ontario families facing an increased tax burden for years to come.

If you would like to calculate the impact for your family please visit my website at www.ErnieHardemanMPP.com. By entering a few of the items that you pay for regularly such as coffee, electricity, newspapers and haircuts you can estimate the minimum cost of the new tax.

According to documents sent out by the Ministry of Agriculture, Food and Rural Affairs one of the items that will be subject to the 8% tax increase is farmland. Imagine the new farmer who doesn’t yet have an HST number and has to wait for 8% of the purchase price of the land to be rebated.

If that farmer purchased a 200 acre farm at $5,000 an acre he would have to add $80,000 to the mortgage to cover the cost of the HST. If he is unable to put the rebate against the mortgage, then at 5% interest for an amortization period of 25 years, he will have to pay an additional $59,585 in interest payments on the HST.

One of the major changes that will affect farmers is the loss of the point-of-sale exemption. As you know, farmers currently show their farm organization card when making a purchase and the provincial sales tax is automatically removed. It is something that I know the agriculture industry fought for and I was proud to be part of the introduction of this change when I was Minister of Agriculture, Food and Rural Affairs.

Unfortunately the McGuinty government failed to negotiate for a point-of-sale exemption. This means that farmers are going to have pay the tax and then apply to get their own money back from the government. For some farmers this may mean waiting months or even a year for their rebate. For many farmers this may mean increasing their operating loan while they wait for their money to be returned to them.

There are still many details about the implementation of the HST that are unknown. However it is clear that the HST will increase the cost of living for Ontarians at a time when many people are struggling just to make ends meet. The PC Caucus believes that Ontarians are taxed enough. We believe that the McGuinty government should immediately cancel plans for this tax increase.