 
Sales taxes in Ontario are particularly obnoxious. Take for example the stuffed creature at the right, which one of us happened to purchase.Its marked price was $5.99. Not altogether unreasonable, when you consider that you can attempt to win one pitching baseballs into milk cans at a dollar a ball and easily spend over ten dollars and not even win one. (Let's not dwell on that, shall we?) The rate of GST, as it was everywhere in Canada, was set then at 7%. GST on the stuffed toy is calculated by finding 7% of $5.99: 7% of $5.99 = 0.07 x 5.99 = $0.42 or 42 cents. So you would expect it to cost a total of $5.99 + 0.42, or $6.41 Unfortunately, Ontario also has something called Provincial Sales Tax. The rate of PST everywhere in Ontario is a whopping 8%, over and above the GST. (Alberta doesn't have a PST) PST on the stuffed toy is calculated by finding 8% of the original price: 8% of $5.99 = 0.08 x 5.99 = $0.48, or an additional 48 cents. So the miserable thing now costs a total of $5.99 + 0.42 + 0.48, or $6.89 It could have been worse, of course. PST is calculated separately from GST. If they weren't separate, here's what would happen: GST = 7% of $4.99 = 0.07 x 5.99 = $0.42, giving a total cost with GST of $6.41 PST is then calculated on the total price plus GST: PST = 8% of $6.41 = 0.08 x 6.41 = $0.51 Which would give a final total of $6.41 + 0.51 = $6.92 Fortunately, they don't calculate it this way.  Sales tax is not insignificant when you're buying something expensive. Suppose you want to buy a new truck, worth let's say $32,000.The GST is 7% of $32,000, or $2240 The PST is 8% of $32,000, or $2560 If you live in Ontario, the truck will cost you an extra $4800! If you borrow the money, at perhaps a 4% interest rate, this adds a further $1280, making the cost of the vehicle $38,080 |