Benjamin Franklin was wrong when he said that a penny saved is a penny earned. Well, maybe, he was right at the time he said it, but he is certainly wrong now. A penny saved is worth a lot more than a penny earned.

For every dollar earned you will have to pay Provincial and Federal Income Tax (for a middle income earner in Ontario) of about 35%. Then when you spend that dollar you will pay Provincial Sales Tax and Federal Sales Tax (again in Ontario) of 13%. This leaves you with 52 cents.

That is almost half of your earnings gone to the government. I recognizes that taxes are a necessary evil. They are needed to fund the services and infrastructure that we depend on. However I believe that government is not as frugal as it should be. The more money politicians have the more they want to spend. If every Ontarian spent one dollar every day, the government of Ontario generates $1,028,050.88 in PST.

Provincial sales tax is not some magic entity that the government collects you when you buy something. It is based on a bill that was passed into law, the Retail Sales Tax Act R.S.O. 1990. As such there are items which retailers can charge you tax for, on the government's behalf, and items which are tax exempt. Knowing what is exempt will save you a lot of money on the long run. Like most laws, the interpretation is a difficult task. Retailers and cashiers make a lot of mistakes.

Table 1: Sales Tax Collection by Provincial Governments

Province Population %Canada PST GST Tax PST Based on Pop.
Ontario 12,850,636 38.8% 8% 5% 13% $1,028,050.88
Quebec 7,719,993 23.3% 7.5% 5% 12.5% $578,999.48
BC 4,402,931 13.3% 7% 5% 12% $308,205.17
Alberta 3,486,767 10.5% 0% 5% 5% $0
Manitoba 1,190,400 3.6% 7% 5% 12% $83,328
Saskatchewan 1,003,299 3.0% 5% 5% 10% $50,164.95
Nova Scotia 935,106 2.8% 8% 5% 13% $74,808.48
New Brunswick 750,851 2.3% 8% 5% 13% $60,068.08
Newfoundland 507,475 1.5% 8% 5% 13% $40,598.00
PEI 139,103 0.4% 10% 5% 15% $13,910.30
Northwest 42,425 0.1% 0% 5% 5% $0
Nunavut 31,127 0.1% 0% 5% 5% $0
Yukon 31,115 0.1% 0% 5% 5% $0

Note: Population is based on April 1, 2007 Census Data. HST a combined GST and PST tax has been split to reflect the provincial portion of the tax.

How much is a Cup of Tim Horton's Coffee?

Canadians love their coffee, especially Tim Horton's. A medium coffee costs $1.14 before tax. If you buy a cup of coffee by itself, then with 5% GST it will cost you $1.23. Food items under $4 ($3.99 or less) are PST exempt. However if you buy a breakfast sandwich with that cup of coffee, and your total before taxes is greater than $4, then it will cost you $1.29 for the same cup of coffee. That is 6 cents more. You will also pay PST of the breakfast sandwich because you combined it with the coffee.

What you should do is split the bill. Pay for the coffee first, and then pay again for the breakfast sandwich.

Some people might have difficulty doing this. So I have come up with some commonly asked questions on how to go about ordering like this.

What about at the drive-thru?

Tell the cashier before you order that you want two separate orders. Give them your first order, wait for the total, and then give them you second order.

What about the people behind me?

You were in line first and you are placing your order in sequence. It should be no different than if you were standing in line with a friend. One of you was buying the coffee and the other the breakfast sandwich.

Why should I don't care about saving a few cents?

This is the most common comment that we have received. To the people who have made this comment, we have to give them a big thank you.

The Fundamentals of Capitalism states that there has to be someone in China manufacturing for 10 cents/hr in order for the Dollar Store to charge you $1 for an item. Imagine if that same item was manufactured for $10/hr in Canada, it cannot be sold for $1. This scenario is harsh but it is reality.

The people who don't care about saving a few cents are the ones that are paying the salaries of Ontario's government. If every Ontarian decided that they would split the bill so that they would not have to pay PST on their cup of coffee. The government would be out of $1,171,978 if every Ontarian bought a medium cup of coffee every day.

Coming soon a cheat sheet on what is PST exempt.


  1. Anonymous // April 2, 2009 at 10:55 PM  

    As a small business owner with 4 staff members and I am a single parent the cost of accepting visa alone hits to the tune of close to $4000 per year by losing 2.3% on every transaction. I lose this monsy based on the total amount of the sale which includes GST. So when a service is $100, I lose 2.3%on $105 not $100 which is equal to $2.41. If the taxes are combined to 13%. The business now loses $2.60. Oh sure sure, apparently we use this as a tax deduction but when a small business is trying to create new jobs and increase business through advertising and renovations it is almost impossible to do this when you are losing close to $5000 per year for simply accepting a single major credit card. When a small business owner is trying to keep a float by paying staff reasonable wages and doing everything in their power to continue on without laying staff off during slow season or recessions, How is this possible to do when the Government is adding on extra fees to anything they possibly can. I have yet to see a tax rebate as a single parent and small business owner. BONUS! HA! I love what I do, I love my staff but as a consumer and a business owner it will leave me no choice but to cancel accepting credit at all! I will have to remit more money to the Government and Lose more money for doing this. FORGET IT! Unfortunately Debit transactions or Cash will be the only way for us to continue.

  2. Anonymous // November 17, 2009 at 9:57 PM  

    Government are jerks! Can they seriously stop taxing us. It`s ridiculous, how can they charge 13% on a home, that`s ridiculous, thats the one thing we were able to make money on, now the housing prices will drop and we will all be out what we had invested! Enough is enough . Why do we let this happen, we cant let these idiots line their pockets with our hard earned money anymore. We need to Speak out and say NNNNNOOOOOOOO!