The conservatives have quietly moved to begin charging GST on a range of financial services. In a ways and means motion this past week the conservatives quietly did a little definitional dancing and thereby brought the financial sector into the goods and service tax regime (well actually revoked their tax exempt status). This makes sense. There is not any basis on which to make a distinction between services rendered in the financial sector and services rendered in any other sector. I expect the banks will begin carping “but we are special.” You heard it here first.
This is a good move. The devil is of course in the details and we will have to wait and see just what financial services and products will be included. From what I gather the tax will apply to commissions. So if a dealer sells a product at 1000 of which 200 is a commission the dealer will have to charge 10$ of GST or 28$ of HST to the customer. So this not a financial transaction tax per se. It will be interesting to find out if the tax will apply to the commissions on day trades and the like. For some sectors this not such a big deal as they tend to sell policies and thus earn commissions on an annual basis. But should this apply to commissions on day trades for example the revenue for the government could be quite substantial.
What I find interesting is that being a commission tax it will make it more transparent to the customer how much of the product they are buying is a service fee and how much is the actual cost of the product.
Seems the CP broke the story this morning in the Ottawa. And the carping has indeed begun. The industry claims the government stands to gain a billion dollars. I am surprised the number is that low.