Mr. Speaker, in response to (a) and (b), in the 2009 Ontario budget, “Confronting the Challenge: Building Our Economic Future”, which is available online at http://www.fin.gov.on.ca/english/budget/ontariobudgets/2009/papers_all.pdf, the Government of Ontario announced its decision that, starting July 1, 2010, Ontario’s retail sales tax, RST, would be converted to a value-added tax structure and combined with the federal goods and services tax, GST, to create a federally administered single sales tax, subject to the approval of the Legislative Assembly of Ontario.
The Memorandum of Agreement, MOA, Concerning a Canada-Ontario Comprehensive Integrated Tax Co-ordination Agreement, signed by the governments of Canada and Ontario specifies that Ontario agrees to adopt the goods and services tax, GST, tax base for the Ontario portion of the harmonized sales tax. However, the MOA allows the province to designate a limited number of point-of-sale rebates for the provincial portion of the harmonized sales tax, not exceeding 5%, in aggregate, of the value of the GST base in the province. The MOA commits both governments to a comprehensive integrated tax coordination agreement, CITCA, that will elaborate on the provisions of the MOA, such as those relating to provincial tax policy flexibility, e.g., point-of-sale rebates.
In response to (c) and (d), under the MOA the federal portion of the harmonized sales tax in Ontario is 5% , and, therefore, equivalent to the current GST rate. As a result, it is not anticipated that the Government of Canada will see any change to the revenues it currently collects with the GST.