Ontario magazine publishers seem resigned to HST

The forthcoming harmonization of sales taxes in Ontario has been met with a strange silence, at least publicly, on the part of the province's magazine publishers. It effectively adds 8% to the cost of magazines bought by subscription as of July 2010. Provincial sales tax had previously not been charged on subs (although it had been charged on single copies at the checkout).

Magazines Canada seems to have concluded that a battle against the HST in Ontario is essentially unwinnable:

Specifically on HST, it is clear that the Ontario Government is fully committed to the harmonization goal and is not willing to entertain unlimited exceptions. There are a number of member points of view on this. Some view this as a Canadian-content issue where all magazines should be HST exempt. However, as the GST/PST already impacts magazines at retail and has done so for many years and this is an issue affecting subscriptions, the cultural argument, while valid, may not be reasonably achievable. Magazines with national circulation lists have made the transition to harmonized sales tax regimes in other jurisdictions. Governments know this. But the transition in other jurisdictions was pursued under very different circumstances. Magazines Ontario must address today's challenges in a pragmatic way. [Coverlines, Aug. 24]

It is putting its energy into trying to delay the implementation, citing the recession, and making sure that multi-year subscriptions are only charged HST from the time of the transaction (so, for example, people who buy two- or three-year subs before July 2010 wouldn't pay HST until their next renewal.)

The best estimate of subscriptions sales in Ontario is about $162 million (as of 2003-04, according to Statistics Canada), which means that an 8% increase represents $13 million out of the pockets of subscribers. And subscribers, of course, can't make an "input tax credit" claim for the increase. How they'll react is anybody's guess. It should be remembered that fully half of Canada's magazines are based in Ontario.

Assuming that the price increase resulted in a 10% drop in subs at an average $20 each, that would mean a loss of $1.3 million in revenue annually and 65,000 fewer subscriptions sold. Not a cataclysm, but not chicken feed, either.

For reasons best known to the province, books have been exempted from the HST, although it is extremely difficult to say why a commercial publisher's 250-page novel should be treated differently from a 250-page not-for-profit literary quarterly. Neither have advertising, both receive various forms of public subsidy. Yet one gets an 8% tax hike while the other does not. The unfairness is obvious.

Those who remember the advent of the goods and services tax will recall the howl of outrage from the industry; not that it did us much good. But this time, the tax grab is being accepted in Ontario with what seems like resignation.