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Harmonized sales tax
The harmonized sales tax (HST; French: taxe de vente harmonisée, TVH) is a consumption tax in Canada. It is used in provinces where both the federal goods and services tax (GST) and the regional provincial sales tax (PST) have been combined into a single value-added tax.
The HST is in effect in five of the ten Canadian provinces: New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario and Prince Edward Island. The HST is collected by the Canada Revenue Agency (CRA), which remits the appropriate amounts to the participating provinces. The HST may differ across these five provinces, as each province will set its own PST rates within the HST. In provinces and territories which have not enacted the HST, the CRA collects only the 5% goods and services tax. HST needs to be filed monthly, quarterly, or annually, depending on the annual revenue of the business.
The current rates by province are as follows:
The introduction of the HST changed the PST for these provinces from a cascading tax system, which has been abandoned by most economies throughout the world, to a value-added tax like the GST.
To help maintain revenue neutrality of total taxes on individuals, the Canadian government (for the GST) and the participating provincial governments have accompanied the change from a cascading tax to a value-add tax with a reduction in income taxes, and instituted direct transfer payments (refundable tax credits) to lower-income groups. The federal government provides a refundable Goods and Services Tax Credit of up to $248 per adult and $130 per child to low income people for 2009-10. Provinces offer similar adjustments, such as Newfoundland and Labrador providing a refundable tax credit of up to $40 per adult and $60 for each child.
In 1996, three of the four Atlantic provinces—New Brunswick, Newfoundland and Labrador, and Nova Scotia—entered into an agreement with the Government of Canada to implement what was initially termed the "blended sales tax" (renamed to "harmonized sales tax") which would combine the 7% federal GST with the provincial sales taxes of those provinces; as part of this project, the PST portion of the new HST in these provinces dropped from 10% to 8%. The result was a 15% combined tax when the federal GST was added. The new tax for these provinces went into effect on April 1, 1997.
The HST is collected by the Canada Revenue Agency, which then remits the appropriate amounts to the participating provinces. Subsequent studies have been equivocal as to the success of this implementation for these provinces' economies and their consumers.
On July 1, 2006, the Government of Canada reduced the GST nationwide to 6%, resulting in a combined HST for Nova Scotia, New Brunswick and Newfoundland and Labrador of 14%. The GST was again lowered nationwide on January 1, 2008 to its current rate of 5%, resulting in a combined HST in Nova Scotia, New Brunswick and Newfoundland and Labrador of 13%.
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Harmonized sales tax
The harmonized sales tax (HST; French: taxe de vente harmonisée, TVH) is a consumption tax in Canada. It is used in provinces where both the federal goods and services tax (GST) and the regional provincial sales tax (PST) have been combined into a single value-added tax.
The HST is in effect in five of the ten Canadian provinces: New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario and Prince Edward Island. The HST is collected by the Canada Revenue Agency (CRA), which remits the appropriate amounts to the participating provinces. The HST may differ across these five provinces, as each province will set its own PST rates within the HST. In provinces and territories which have not enacted the HST, the CRA collects only the 5% goods and services tax. HST needs to be filed monthly, quarterly, or annually, depending on the annual revenue of the business.
The current rates by province are as follows:
The introduction of the HST changed the PST for these provinces from a cascading tax system, which has been abandoned by most economies throughout the world, to a value-added tax like the GST.
To help maintain revenue neutrality of total taxes on individuals, the Canadian government (for the GST) and the participating provincial governments have accompanied the change from a cascading tax to a value-add tax with a reduction in income taxes, and instituted direct transfer payments (refundable tax credits) to lower-income groups. The federal government provides a refundable Goods and Services Tax Credit of up to $248 per adult and $130 per child to low income people for 2009-10. Provinces offer similar adjustments, such as Newfoundland and Labrador providing a refundable tax credit of up to $40 per adult and $60 for each child.
In 1996, three of the four Atlantic provinces—New Brunswick, Newfoundland and Labrador, and Nova Scotia—entered into an agreement with the Government of Canada to implement what was initially termed the "blended sales tax" (renamed to "harmonized sales tax") which would combine the 7% federal GST with the provincial sales taxes of those provinces; as part of this project, the PST portion of the new HST in these provinces dropped from 10% to 8%. The result was a 15% combined tax when the federal GST was added. The new tax for these provinces went into effect on April 1, 1997.
The HST is collected by the Canada Revenue Agency, which then remits the appropriate amounts to the participating provinces. Subsequent studies have been equivocal as to the success of this implementation for these provinces' economies and their consumers.
On July 1, 2006, the Government of Canada reduced the GST nationwide to 6%, resulting in a combined HST for Nova Scotia, New Brunswick and Newfoundland and Labrador of 14%. The GST was again lowered nationwide on January 1, 2008 to its current rate of 5%, resulting in a combined HST in Nova Scotia, New Brunswick and Newfoundland and Labrador of 13%.