Ontario unveils new HST exemptions

The Ontario government will exempt beverages and food sold for under $4 along with newspapers from the provincial component of the new harmonized sales tax, Finance Minister Dwight Duncan said Thursday.

"We’re simply extending an existing sales tax exemption that has been in place since 1961," Duncan said at an announcement at a Toronto Tim Hortons in Etobicoke.

The new exemptions will see the province forgo $325 million in revenue, Duncan said.

The HST, which merges the eight per cent provincial sales tax with the five per cent GST is scheduled to come into effect July 1, 2010. Magazines and periodicals will not be exempt under the new changes.

Duncan said the government is "not contemplating" further exemptions before the HST legislation is introduced at Queen’s Park on Monday.

The province has already said books, children’s clothing and footwear, diapers, car and booster seats and feminine hygiene products will be exempt from the provincial component of the new tax.

The mutual-fund industry has complained the new tax would add an additional eight per cent tax to mutual-fund fees. The complaint is similar to one made by many sectors previously exempt from the eight per cent PST.

On Thursday, Duncan touted a new report by tax expert Jack Mintz who said the HST together with other tax changes would create 591,000 new jobs in the province over 10 years.

Opposition parties have vowed to fight the HST calling it a tax grab.

Progressive Conservative MPP Peter Shurman said the government’s new exemptions show Premier Dalton McGuinty is feeling the pressure.

"What we’ve now seen is McGuinty is disingenuous in saying things have to be applied across the board," Shurman said. "If he caved on this he’ll cave on other things."

NDP Leader Andrea Horwath said the government is "scrambling" to make the HST more palatable for families.

"The government can sugar-coat this all they want, but there’s no getting around the fact that families are going to see the costs of everyday purchases going way, way up – even if the government is kind enough not to increase the taxes on coffee and doughnuts," said Horwath.

The Ontario Restaurant Hotel & Motel Association called the new exemptions welcome news.

"This announcement will support maintaining jobs in the industry," Tony Elenis, the association president said in a statement.