The new sales tax combines the five per cent GST and the seven per cent PST into a single 12 per cent levy called the HST, effective July 2010. .
Some items that were previously exempt from the PST are now taxed at the higher HST rate: the new sales tax. These include: restaurant meals, airline tickets, funerals and haircuts. Homes are also subject to the HST, but offset by partial rebates of five per cent to a maximum of $20,000 on new homes
A number of items will still be exempt from the PST portion of the new tax: gasoline and diesel fuel for vehicles, books, children's clothing and footwear, children's car seats and car booster seats, diapers and feminine hygiene products.
The HST is supposed to help make businesses more competitive by reducing their costs, since they receive a refund of sales taxes paid on their input costs. The savings should be reflected in lower prices for their products. .