Politics

Budget 2017: Hello Uber tax, goodbye transit credit

Consumer tax changes in today's federal budget will add to the cost of Uber rides while ending a public-transit tax credit. Those are just two of several Liberal government moves that will hit pocketbooks directly, though modestly.

Liberals' 2nd budget also does away with Canada Savings Bonds program while adding pennies to cost of alcohol

Users of Uber and other ride-sharing services will start paying sales tax, one of the handful of small tax measures in Wednesday's federal budget. (Jeff Chiu/Associated Press)

Consumer tax changes in Wednesday's federal budget will add to the cost of Uber rides while ending a public-transit credit.

Those are just two of several Liberal government moves that will hit pocketbooks directly, though modestly.

The measures include slight increases — pennies, in fact — in tobacco and alcohol taxes.

And on the savings side, the budget ends the long-running Canada Savings Bonds program this year, now recognized as an inefficient way for governments to raise money.

Created in 1946 to replace a war-bonds program, savings bond sales have fallen sharply in recent years as the interest rate earned fell behind the savings rates offered at banks and other private institutions.

The government says it will honour the $5 billion of Canada Savings Bonds that are currently outstanding, but won't sell any more.

The proposed levy on Uber and other ride-hailing services would for the first time impose GST/HST on fares, in the same way they are charged on traditional taxi services. The change will broaden the definition of a taxi business to ensure Uber and other web-based ride-hailing services are required to charge and remit GST/HST, adding to the cost of each trip.

The effect on federal revenues will be modest, just $3 million in additional revenue in 2017-18, but the budget suggests the measure is to help level the playing field and create tax fairness.

The non-refundable public transit tax credit — a so-called boutique tax credit introduced by the previous Conservative government — will be phased out on July 1. The credit enabled public transit users to apply 15 per cent of their eligible expenses on monthly passes and other fares toward reducing the amount of tax they owe. Ending that tax break is expected to save Ottawa more than $200 million a year.

The increases in so-called sin taxes on alcohol and tobacco come into effect Thursday, adding a penny to the price for a litre of wine, for example, and just over two cents to a litre of spirits.

A 24-pack of beer is going up by five cents, and 200 cigarettes will cost another 53 cents.

The higher excise taxes are expected to put $85 million into government coffers in 2017-18.

Foreign tourists will no longer be eligible for a GST/HST rebate on the cost of their accommodations or tour packages. Once phased in next year, the change will add $15 million in sales taxes to the federal treasury.

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