Gunsmith
Well-Known Member
That sounds to me like the formula that was used to convince us the metric system would be good for us. Reduced volume, new container, extra cost for the container = less product for the same price or more! Wow! Modern business math.
Yes but you're missing the point. Supply and demand drives prices of goods not taxation. When you reduce the cost of operating a business, that business can then reduce the price of their product while still maintaining the same profit margin. In fact the effect of transitioning from a PST style tax to a value-added style tax is so beneficial to business that price could technically be reduced enough that the increased cost for HST to the consumer is completely negated.
This is not something that happens over night. It take time for this type of change to flow through the entire economy and show any significant effect for consumers. In a healthy economy you will have competing business that drive down prices and with the HST they were able to do so to a greater extent.
In Ontario, government economists came to this conclusion after only the first year and it gets only better for the consumer. BC would've been even better off as consumers had more tax credits and reimbursements for thing like natural gas and electricity.