The Harmonized Sales Tax (HST) will come into effect in Ontario on July 1, 2010. But many are still confused as to what products and services the tax will apply to, and which ones they won't. Here's some clarification.

Let's start with the electronics category. HST will not be applied to consumer electronics products like TVs, DVD and Blu-ray players, MP3 players, cell phones and service, or CDs/DVDs/Blu-ray discs. (However, new and unrelated recycling fees in Ontario will affect pricing in these categories.) So the consumer electronics market isn't immune to higher costs this year.

Do expect to pay 8% more on services like electricity and heating; Internet access; trade service calls (electricians, plumbers, carpenters, electrical wiring, etc.); and landscapers, lawn care persons, and private snow removal. You won't pay more, however, for the TV repairman, or repairs to other home appliances, like refrigerators, washers, and dryers. Your cable TV service will be left alone as well, although those services recently experienced a small increase, again unrelated to HST, as the result of a CRTC decision to support local TV stations.

In terms of travel, there will be an increase from 10% tax on hotel rooms to 13%. Also upped to 13% will be taxi fares, camping sites, and domestic air, rail, and bus travel within the province. Previously, taxes on these services were just 5%.

While most household items will not see an increase, you will pay 8% more in tax for magazine subscriptions, as well as home renovations. The major change in vehicles, aside from an increase for private sales, is that we'll be paying 8% more for gasoline, from 5% tax to 13%.

New homes costing $400,000 or more will now see a greater amount of tax on their purchase. However, Canada Revenue Agency notes that: "the new housing rebate will be at 75 per cent of the Ontario component of the HST, up to a maximum of $24,000. The rebate will ensure that buyers of homes priced up to $400,000 will, on average, pay no more tax than under the RST system. However, applicable RST on building supplies is embedded in the price of the home." Real estate commissions will also increase by 8% to 13%.

Other areas where HST will apply include dry cleaning services; alcoholic beverages; massage therapy; vitamins; green fees for golf; gym and athletic membership fees; ballet, karate, hockey, soccer, etc. lessons; live theatre tickets (with 3,200 seats or fewer); hockey rink and hall rental fees; fitness trainers; hair stylists; esthetician services; funeral services; legal fees; and tobacco and nicotine replacement products.

Bottom line: the cost of living in the province of Ontario is about to go up in at least some small way for everyone; not just for those buying new homes or driving cars.

For more detailed information on the HST, see the Shop Talk column in the November 2009 issue of Marketnews Magazine. (Digital editions of the magazine are only available to online members of the Marketnews.ca community. Click here to create a profile and gain access to this issue, as well as other archived issues of the magazine.)

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