CH 3: The Role of Government in a Market Economy

Source: http://www.thestar.com/news/ontario/hst/article/734394--hst-equals-hated-sales-tax

Summary:

75% of Ontario residents oppose the new HST tax that has yet to take effect. Opinions of many have changed about the government following the introduction the Harmonized Sales Tax (HST). The first day that the new tax was announced, various interest groups rioted and formed an anti-tax rally along with around 300 First Nations people. The First Nations are fighting for their freedom from this tax due to the fact that they already live in poverty and struggle to purchase products. It is believed that the tax will increase prices of a lot of necessary commodities like gasoline, heating fuels, etc.

Connection:

The obvious connection between this article and the chapter at hand is that the government is introducing a new tax which could affect the inflow and outflow of cash for a business. The new HST tax could prove to drastically reduce the amounts of revenue a company can generate. The demand for products in all markets could severely drop, except for the daily necessities that people require like milk and such. Some negative third party effects that might result would be that companies which earn profit by doing services that are not subject to HST might also not generate as much profit. This is because more money will be needed to operate the workplace which will lead to increased prices for the services. There is also the fact that because products are more costly now, consumers will likely not engage in paying for services that aren't necessary.

Reflection:

I agree with Ontario residents, the HST tax will cause a great financial burden on many people that are barely making a living and those that are already living in poverty. Due to the increased prices for homes and land, homeowners already have to pay increased property taxes. Now that this new tax comes along; things just gets worse. A lot of the HST tax money will go to education, but many people in our society don't benefit from that.