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.
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I personally do not welcome the HST tax. I, like the majority of the population, will go out less and spend less on food. This new tax being introduced will cause a lot of financial problems for those that are on the borderline between poverty and middle class. What's the most concerning about this new problem is that the food industry will be hit the hardest. Restaurants will be put into tough situations. They'll need to think of clever marketing strategies that aren't too costly so that they can retain their number of customers. Restaurants that have been here for years will go bankrupt and disappear. Many jobs will be lost.
ReplyDeleteI also don't like the idea of the HST tax that will be taking effect on July 1, 2010 because the general population appreciates getting good deals and paying less, and we’re most concerned with the already “high” tax rates in which we have to pay. There is going to be a tough negotiation with the government to reject HST because people are not willing to be paying more for food. Moreover, with the new HST In effect, I have to agree with you that the food market will be greatly affected because consumers will not be willing to go out as often to dine or to spend more on food. This as a result would also lead to a decrease in the GDP for Canada. However, I don’t think this HST will come into effect or it shouldn’t be in a long-term effect because the majority of the citizens in Canada may not like this new tax.
ReplyDeleteThe HST tax would be unfavourable by many people. Many people including me would not go out as much to eat at restaurants. I agree that it would have a negative impact on the food industry and that many people may lose their jobs including my father considering the fact that he works in the restaurant industry. This may cause some financial problems with the families. I agree with Samson that the industry will need to think up of marketing strategies that will not allow them to lose any customers. Hopefully Parliament will reject the HST tax; otherwise, many consumers will be reluctant to spend money eating out even though they enjoy it.
ReplyDeleteI agree with you that the new HST tax is a terrible idea. Consumers are attracted to low prices and good quality. This new tax would affect the food industry because there would be fewer consumers. With the food industry losing customers, our economy will also drop. This new tax doesn’t only affect restaurants but also the suppliers because without customers in restaurants, there would be no need for food. This tax may also lead to layoffs if restaurants aren’t making revenue. Without workers, our economy will drop which leads to the decrease of our gross domestic product. Increasing taxes or introducing a new tax is never a good for the economy because people are reluctant to paying more which would lead to spending less.
ReplyDeleteWith this recession we need to raise taxes because the money will flow back into the economy and make it stronger. I understand that it sucks having to pay the extra amount, but the money that is taken goes towards our own benefit. Taxes pay for education and healthcare. They are important and very necessary especially in these hard times. You lose money in the short run but it will pays off in the long. If the taxes are spent on the right things it will help pull us out of this recession and make our economy stronger. If we ever want to get out of this recession we NEED to raise taxes.
ReplyDelete-Johnny NG
I agree that the newly formed HST tax is just another way of taking money out of our pockets. This is because not many people would want to buy the samething at a higher prices. Consumers on the market are attracted to low prices. I believe that Canadian Restaraunts and Food Services Association will be laying people off in the near future due to the decrease in income they make. This is because lower end consumers won't be able to afford buying things they could have got without the HST tax. However, I think this HST tax won't be in effect for a long period of time, I think this because with this tax, it can help the economy rise. Knowing that we are in a recession right now, this would help Canada get out of the recession.
ReplyDeleteI am actually in a different position than the rest of you. I know that many people currently HATE the idea of HST because of the full 13%. If you researched HST in depth, the full 13% is not the only modification to our old sales tax system. An important point to note is that businesses will be exempt from all sales tax, making them a lot more cost-competitive. Businesses will have a lot more money in their pockets, so I don't think restaurants, businesses in general, will suffer. With the lower costs, they can achieve lower prices and that will neutralize paying the 13%. Economists that have carefully studied the long-term effects of HST believe that it will create more jobs rather than lay off people.
ReplyDeleteI would also agree with the majority of people who thinks the newly formed HST tax is not a good idea. I think this might cause current Canadians to spend a lot less due to the full 13% tax. Some of the restaurants would close down and many more Canadians would lose their jobs since the prices in restaurants would increase. Some Canadians are still struggling to pay all their bills on time with the economy still being bad. The government should find another way to take money from Canadians, not combine it into a 13% tax.
ReplyDeleteTwo words. HST sucks! Personally i would not like to see the HST come into play. I enjoy my privileges of exempting the 7% PST on top of my purchases of particular goods and services. Yes i agree with what you said. This disincentive will make people think twice before dining out on a perfect saturday night. In your reflection you said, "waiters will get less tip." but really will they? After the HST is introduced, it is mandatory for consumers to pay that 12%, so the bill compared to the one which only 5% GST was charged would be greater. Which means more expensive bill, more tip. Unless what you meant was that because of the HST less people will go out to eat and therefore, less people less service, little tip. Anyways, when you say, "It just sickens me that the government can just keep doing what they want." you make it sound like we live in a dictatorship country. Without taxes, how do you expect the government to get money to fund the educational system and healthcare? I do not support HST because it does not benefit me and the fact that i find that our tax system is fine the way it is. Particular individuals will find this change something hard to cope with. Although we live in a democracy country where everyone can voice their own opinion, simpletons like me have no say in any of this.
ReplyDeleteIt seems that the majourity of people see the introduction of the harmonized sales tax as a negative contribution to our economy. After some research I found out that the new tax was introduced to reduce the cost of goods that Ontario exports, making the province more competitive so our country can recover from the economic turn down we suffered from. Part of the reason why this tax was introduced is because the current party in power is the conservatives and they believe that everyone should contribute their part in helping the economy recover. Besides the introduction of the HST, the Conservative government is also eliminating PST exempts. This means that prices of gasoline, electricity, and newspapers will most likely increase. Looks like the government is not only squeezing out more money from us from the introduction of the HST.
ReplyDelete