Saturday, May 1, 2010, marked the initial stage for implementing Ontario’s controversial 13% harmonized sales tax. Critics maintain it’s a tax grab which will greatly affect the average family’s buying power. Proponents believe it’s an economic catalyst which will boost Canada clear from the recession.

In December 2009, Ontario passed the Liberal-proposed HST legislation to increase the cost of 17% of all goods and services previously exempt from the provincial sales tax.

As of July 1, 2010, consumers purchasing items and services, such as vitamins, gas, haircuts and Christmas trees, will be paying a combined provincial sales tax (8%) and federal sales tax (5%).

Softening the blow to taxpayers, the government cut personal taxes this year as of January 1, 2010, and promises a “transition” cheque of up to $1,000 for some families starting in June.

Premier Dalton McGuinty maintains this is a business-friendly decision which consumers will notice in a bigger job market.

From TheStar.com:

“We’ve indicated that one of the most important reasons why we’re going ahead with our package of tax reforms is to create 600,000 more jobs,” the premier said, citing a study showing the HST will “produce $47 billion more by way of investment in new business” in the coming years.

Last week, some companies and Revenue Minister John Wilkinson advised consumers to make certain purchases before Saturday, May 1, 2010, to avoid paying both taxes. (Source: cbc.ca) As per this initial transition stage, items which will be used after the law is in full-effect in July, such as theatre packages, airplane tickets and gym memberships, are now subject to the HST.

Liberal opposition members, like NDP Leader Andrea Horwath, has said the revenue minister’s consumer advice to “beat the tax” is an admission that the HST is going to cost families more than they can afford.

What do you think of Ontario’s new HST? Will the pain of higher costs at the cash register be the means for the greater good of the province?