Reject the Devastating Harmonized Sales Tax!

http://www.vancouversun.com/business/Parliament+must+reject+devastating+harmonized+sales+restaurant+association/2290432/story.html

Summary:
This article talks about the Canadian Restaurant and Food Services Association (CRFA) requesting the Parliament to deny harmonized sales tax (HST). This new tax, which will take effect on July 1, 2010, will greatly damage the food market. With the seven percent increase on food, restaurants will surely be losing a lot of profit. The president and CEO of the CRFA, Garth Whyte announced that restaurants will be earning $750 million dollars less per year. Whyte also stated that even though the recession is slowly recovering, consumers will purchase less food and go out less often because of the HST. There are studies that have proven that with the GST implemented in 1991, sales in the food industry dropped by about 11%. In that very same year, the GDP fell down by 2%.

Connection:
This article relates to what we are currently learning in Economics. The government has a role in the market, in this case, it is collecting the tax money. This also ties in with gross domestic product (GDP) for Canada. The term gross domestic product represents the value of all goods and services produced in a given year. The GDP will surely decrease as of 2010 because this HST will affect the behavior of consumers. They will probably stay home more often for lunch and dinner, so the food market will surely be impacted. However, this wouldn't be a long-term effect because it just takes time for consumers to get adapted to the increased prices.

Reflection:
There is no doubt that the food industry will face a significant impact by the addition of the HST. The restaurants will earn a lesser profit, the workers might even get a raise anytime soon, and waiters will get less tip. This then leads to another thing, which is consumers won't spend as much when they go out to eat. As a result, many restaurants won't make enough of a profit and will eventually close down. Taxes were originally created to help the Canadian government with the war that was going on. It has been many years, yet we still continue having to pay these miserable taxes. It just sickens me that the government can just keep doing what they want.