Blogs & Comment

Get your HST discounts

The HST came into effect in Ontario and B.C. on July 1. The milestone has evoked several posts within the Canadian financial blogosphere, examples of which are:
Michael Jameson howthe HST reduces taxes on taxes andthe double-billing risk Big Canajun Guythinks the HST is a tax grab Jonathan Chevreaunotes the HST is paid in after-tax dollars Triaging My Waydoesnt believe PST savings will be passed on Sachahas a good every-thing-you wanted-to-know piece (BC)
Whats my take, at the present time? I think the next several months could actually be a good time to purchase some of the goods and services impacted by the HST. Many consumers rushed to buy in advance of the extra charge, effectively drawing demand for selected goods and services out of the post-July 1 period. So suppliers are likely now feeling a letdown in business and may be willing to offer discounts to generate orders. Indeed, I wouldnt be surprised if a consumer buying during the second half of 2010 will be able to pay the same, or lower, tax-inclusive price than a consumer who bought just before the HST took effect –especially if the economy continues to wilt.
But you may haveto do some haggling.Price cuts may be offered without asking but don’t count on it in all cases. One primary target fornegotiating price conscessions would bebusinesses that have high amounts of inputs that they previously would have paid PST for, as Sacha writes. They can now claim these costs as input credits under the HST, so they have real scope for discounting. Generally, such businesses would be suppliers of products — e.g.industrial or manufacturing companies. Service companies would have less scope. And some patience may be required the discounts may unfold after a lag.