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Ontario, like all provinces and the federal government, has rules in place to prevent tax avoidance. One of those rules, which has been in place since 1967, applies when taxable and non-taxable items are packaged together, like CD-ROMs in cereal boxes.
I am writing in response to an article by Standard business columnist Larry Robson, who wrongly implied that the provincial government is considering taxing breakfast cereal (Some things are just ridiculous! The Standard, Feb. 25).
The Ontario government has no such plans now -- or any time in the future.
Ontario, like all provinces and the federal government, has rules in place to prevent tax avoidance. One of those rules, which has been in place since 1967, applies when taxable and non-taxable items are packaged together, like CD-ROMs in cereal boxes.
Some cereal manufacturers began such a promotional campaign last year to promote sales. Because the cost of the CD-ROM would have made the
cereal a taxable item, the Ministry of Finance issued a tax exemption to all manufacturers from Aug. 1, 2001 to July 31, 2002.
The exemption ensured that the cereals were not subjected to the Retail Sales Tax. We issued the exemption because we do not believe in taxing breakfast cereals.
As announced in the 2001 Ontario Budget, we are currently reviewing the Retail Sales Tax rules for food products to ensure that they reflect the current marketplace. We are currently exploring options as part of our pre-budget deliberations that would ensure that no such tax is imposed after the current exemption expires in July.
James M. Flaherty
Deputy Premier Minister of Finance
Queen's Park Crescent
Toronto
(Copyright The Standard (St. Catharines) 2002)