Loading...
Canada deserves to know.
Loading...
On May 27, 2026, the Doug Ford government voted down Bill 113 — the NDP's Fair Prices and Tax-Free Groceries Act, which would have removed the 13% HST from all food and drink in Ontario. The defeat is the news hook. The structural question underneath it is older: every dollar of federal and provincial sales tax falls disproportionately on lower-income and middle-class households, and the federal GST/HST credit — the mechanism designed to offset this — phases out before most middle-class earners can claim it. This is the math.
On May 27, 2026, the Doug Ford Progressive Conservative government in Ontario voted down Bill 113, the Fair Prices and Tax-Free Groceries Act, 2026, introduced by NDP MPP Tom Rakocevic. The bill would have removed the entire 13% Harmonized Sales Tax (HST) from all food and drink sold in Ontario — including the prepared meals, deli food, snacks, restaurant meals, and many packaged products that currently carry HST (most basic groceries are already zero-rated). The bill also proposed ending the secret lease covenants that allow major grocery chains like Loblaws and Sobeys to block competing stores from opening nearby. The Ontario Liberal Party has a narrower proposal: remove the provincial portion of HST (the 8% provincial share) from prepared food purchases under $20, costing approximately $500 million per year in foregone revenue, partly offset by a corporate-profit surtax and a high-income tax surtax. This article walks the defeated bill, the structural incidence of HST on Ontario households, the GST/HST credit and why it does not reach the middle class, and the honest caveats — including the fact that universally consumed goods cut in tax also benefit the wealthy in absolute-dollar terms.
**Bill 113 — the Fair Prices and Tax-Free Groceries Act, 2026** — was introduced in the Ontario Legislature by NDP MPP Tom Rakocevic earlier in the spring 2026 session. The bill had two distinct elements:
1. **Remove the entire 13% HST from all food and drink** sold in Ontario, including categories that currently carry HST (prepared meals, deli, snacks, restaurant meals, and many packaged products). 2. **End secret lease covenants** that allow major grocery chains — specifically Loblaws and Sobeys are named in the bill — to insert clauses into commercial leases that bar landlords from renting to competing grocery stores in the same plaza or neighbourhood. These "restrictive covenants" are documented mechanisms that have suppressed grocery-market competition in Canada.
On May 27, 2026, the bill was put to a vote at second reading. The Progressive Conservative majority defeated it.
**Important factual clarification up front:** the bill was not about taxing apples and milk. Basic groceries in Canada — bread, milk, vegetables, meat, fish, eggs, fruit, dry staples — are ALREADY zero-rated under the Excise Tax Act. They carry no GST and no HST. The HST is applied to the FOOD CATEGORIES BILL 113 WOULD HAVE EXEMPTED: prepared meals (rotisserie chickens, deli salads, sushi), snack foods (chips, chocolate bars, ice cream), restaurant meals (eat-in or takeout), and many packaged convenience items. The "tax on groceries" framing is shorthand; the actual policy question is whether the tax on the SPECIFIC FOOD CATEGORIES that currently carry HST should be removed.
The Ontario Liberal Party has a separate, narrower proposal: remove the **provincial portion of HST** (the 8% Ontario share, leaving the 5% federal GST in place) on prepared food purchases **under $20**.
The Liberals first announced this proposal in April 2022 under then-leader Steven Del Duca, and the party has continued to promote it. The party's own published cost estimate: approximately **$500 million per year in foregone revenue**.
The Liberal funding mechanism — also published in 2022 — was approximately revenue-neutral: - A **1% corporate surtax** on companies operating in Ontario with annual profits exceeding $1 billion (estimated to generate about $150 million per year). - A **2% personal income tax surtax** on individuals earning more than $500,000 per year (estimated to generate about $350 million per year).
The Liberal proposal is structurally different from Bill 113. The Liberal version is narrower (provincial portion only; prepared food only; under $20 only) and is paired with a published revenue-replacement plan. Bill 113 was broader (all food and drink) and did not accompany a detailed revenue-replacement mechanism — which is part of what the Ford government cited in opposing it.
The most recent published Department of Finance analysis of consumption-tax incidence — the Report on Federal Tax Expenditures, 2017 edition, Part 10 — provides the cleanest publicly-available data on how the GST falls across the income distribution.
**Federal GST as a share of disposable family income, by income decile** (2010 data, the most recent in the Finance report):
| Income decile | GST as % of disposable income | |---|---| | 1 (poorest) | **3.8%** | | 2 | 3.5% | | 3 | 3.4% | | 4 | 3.2% | | 5 | **3.1%** | | 6 | **2.9%** | | 7 | 2.8% | | 8 | 2.7% | | 9 | 2.7% | | 10 (richest) | **2.1%** |
The pattern is unambiguous: as income rises, the share of disposable income going to GST falls. The poorest decile pays nearly **twice as much**, as a share of income, as the richest.
**For Ontario at 13% HST (rather than 5% federal GST):** the same incidence pattern applies, scaled. The first-order approximation is to multiply by 2.6 (because 13/5 = 2.6) — though the actual ratio is somewhat lower because not every taxable category carries the full HST at the same effective rate. A reasonable working estimate for Ontario HST burden:
| Decile | Federal GST % | Estimated HST % | |---|---|---| | 1 (poorest) | 3.8% | **~7-9%** | | 5 (middle) | 3.1% | **~5-7%** | | 10 (richest) | 2.1% | **~4-5%** |
For a middle-class Ontario household earning $80,000 per year with approximately $60,000 of disposable income, the HST burden lands at roughly **$3,000-$4,200 per year**. That is real money — about a month's rent in most Ontario markets.
Consumption taxes are regressive because of how households at different income levels spend their money.
A low-income household spends nearly 100% of its income on consumption — there is little or no surplus to save or invest. So nearly every dollar of income is exposed to consumption-tax incidence.
A high-income household spends a much smaller share of its income on consumption. The rest goes to savings, investments, mortgages on appreciating assets, retirement accounts, and other non-consumption uses. Those uses do not attract sales tax. So a smaller share of income is exposed to consumption-tax incidence.
The MIDDLE CLASS sits between these — but materially closer to the low-income pattern than to the high-income pattern. Most middle-class households spend the majority of their income on consumption (housing, food, transportation, clothing, services), so most of their income is exposed to sales tax.
This is not a partisan claim. It is the structural arithmetic of consumption taxes, and it applies to every value-added tax in every developed economy. The Department of Finance's own analysis explicitly states the regressivity in its tax-expenditure report.
The federal government has a mechanism intended to offset the regressivity of the GST/HST: the **GST/HST credit**, a quarterly tax-free payment from the Canada Revenue Agency.
Current maximum amounts: - **Single adult:** $519 per year - **Couple:** $680 per year - **Per child under 19:** $179 per year
The credit is **income-tested.** It begins to phase out at roughly $44,000 of adjusted family net income for a single individual (about $58,000 for a family) and is fully phased out by approximately $54,000 for a single individual.
**For a middle-class earner** — say a single Ontario worker earning $70,000 per year, or a family earning $100,000 — the GST/HST credit is **$0**. The middle class pays full HST with **no rebate offset**.
This is the structural feature that the grocery-tax debate is really about. The bottom of the income distribution gets the GST/HST credit. The top of the income distribution barely cares about consumption tax. The MIDDLE pays full freight with no offset, and the middle is where most Canadian voters live.
(Note: the federal Canada Groceries and Essentials Benefit will replace the GST/HST credit starting July 2026, with similar income-testing. The phase-out architecture is similar.)
A working example. Take a middle-class Ontario family of four — two adults, two children, household income $110,000, no GST/HST credit.
Monthly food spending breakdown, rough but typical for this household profile: - Basic groceries (zero-rated): ~$700 → no HST - Prepared / packaged / snack items (HST): ~$200 → about $26 in HST per month - Restaurant + takeout meals (HST): ~$300 → about $39 in HST per month
Monthly HST on food alone: approximately **$65**. Annual: approximately **$780**.
Add in HST on everything else this household consumes — clothing, household goods, electronics, restaurant meals not yet counted, services — and the total annual HST burden for this household is in the $3,500-$5,000 range.
**Bill 113 would have eliminated the food-and-drink portion** of that ($780-$1,200 per year for this family). The Liberal proposal would have eliminated about half of that (the provincial 8% portion, on prepared food under $20).
These are not small numbers for a household budget. They are not life-changing either. They are the order-of-magnitude that grocery-tax debates are about.
Several real counter-arguments deserve fair air-time.
**Universal tax cuts also benefit the wealthy in absolute dollars.** A high-income family that buys $5,000/year of taxable food gets the same 13% rate cut as a middle-class family that buys $2,000/year — meaning the dollar benefit is bigger for the wealthy household, even though the income-share benefit is smaller. This is true of any consumption-tax cut. Targeted income-tested benefits (like an expanded GST/HST credit) reach the same income levels MORE efficiently per dollar of foregone revenue.
**Revenue replacement matters.** Bill 113 did not come with a detailed revenue-replacement plan; the Liberal proposal did (corporate surtax + high-income surtax). Without revenue replacement, the foregone HST has to come out of program spending or be borrowed. The Ford government's public position has emphasized this.
**Broad-based income-tax cuts may be more progressive per dollar.** A reduction in the personal income tax rate at the bottom or middle brackets reaches the same households with less administrative complexity than a category-by-category HST carve-out. Reasonable tax economists have debated this trade-off for decades.
**The competition piece of Bill 113 is independent of the tax piece.** Banning restrictive grocery-chain lease covenants is a competition-law question, not a tax-policy question, and the case for it stands or falls on its own merits (the Competition Bureau has flagged restrictive covenants as a real barrier to competition in Canadian grocery retail). Linking it to the tax question in a single bill may have made the bill harder to pass.
None of these counter-arguments invalidates the underlying regressivity math. They argue about what the BEST POLICY RESPONSE to the regressivity is — not about whether the regressivity exists.
On the documented federal Department of Finance data: sales tax is structurally regressive. The poorest 10% of Canadian households spend nearly twice as much, as a share of disposable income, on the GST as the richest 10%. Ontario's 13% HST scales the burden up across the same gradient.
The GST/HST credit offsets this for low-income households but fully phases out before reaching the middle class, which therefore pays full sales tax with no rebate.
Bill 113 — the Ontario NDP's defeated grocery-tax bill — would have eliminated HST on the food categories that currently carry it (prepared, snack, restaurant, deli, packaged), disproportionately benefiting middle-class households in income-share terms. The Ford PC government defeated it on May 27, 2026, citing revenue and policy-design concerns.
The Ontario Liberal Party has a narrower, revenue-neutral proposal targeting prepared food under $20.
Whether the political response to consumption-tax regressivity should be category-specific HST cuts, an expanded GST/HST credit, broad-based income-tax reductions, or some combination, is a legitimate policy debate. What the documented data does NOT support is the claim that sales tax is neutral across income levels. It is not. It falls hardest on those with least; it falls disproportionately on the middle; it falls lightest on those with most.
Parliament Audit publishes the math.
In 2014, the last full year before the Liberals took office, Canada produced 2,393,890 motor vehicles. In 2024, it produced 1,339,288 — a 44% decline. Over the same decade, federal and provincial governments committed up to $43.6 billion in subsidies to build a Canadian EV battery industry that the Parliamentary Budget Officer estimates will take 20 years to break even. Here is the record.
On May 21, 2026, Canada's broadcast regulator finalized a rule requiring Netflix, Amazon, Disney+, Apple TV+, and other foreign streamers earning more than $25 million in Canadian revenue to hand 15% of those revenues to Canadian-content funds — up from the 5% interim rate. The Liberals call it a "contribution." The streamers (and a likely-Conservative federal opposition) call it a tax. Both are right, depending on what you mean by tax. Here is what is going on, in plain English.
When MPs vote in the House of Commons, the result is published verbatim in Hansard — the official record. Every yea, every nay, every paired and absent member, name by name. This article walks how to find a specific vote, how to read what the record says, and how to use it to check what your MP actually did versus what they say they did.
About this article
Parliament Audit is non-partisan and does not endorse or oppose any legislation. This article is based on publicly available legislative documents and parliamentary records; all sources are linked above.
AI-assisted, human-edited. AI tools help us ingest parliamentary records and draft analysis; an editor reviews every article and verifies key facts against primary sources before publication. Quotation marks are reserved for verbatim text from a primary source. See our methodology and corrections log.
Your MP votes on this. Their constituency inbox is the most-read channel for feedback on bills in committee.
You're welcome to run this article in full on your newsroom, blog, newsletter, or paper. Keep the byline and the link back to parliamentaudit.ca. See the full terms.
<!-- Parliament Audit — republished under CC BY-ND 4.0 -->
<article>
<h1>Ontario's PCs Just Defeated a Bill to Remove HST From Groceries. Here's the Math on Why Sales Tax Hits the Middle Class Hardest.</h1>
<p><em>By Parliament Audit · June 2, 2026 · 7 min read</em></p>
<p><strong>On May 27, 2026, the Doug Ford Progressive Conservative government in Ontario voted down Bill 113, the Fair Prices and Tax-Free Groceries Act, 2026, introduced by NDP MPP Tom Rakocevic. The bill would have removed the entire 13% Harmonized Sales Tax (HST) from all food and drink sold in Ontario — including the prepared meals, deli food, snacks, restaurant meals, and many packaged products that currently carry HST (most basic groceries are already zero-rated). The bill also proposed ending the secret lease covenants that allow major grocery chains like Loblaws and Sobeys to block competing stores from opening nearby. The Ontario Liberal Party has a narrower proposal: remove the provincial portion of HST (the 8% provincial share) from prepared food purchases under $20, costing approximately $500 million per year in foregone revenue, partly offset by a corporate-profit surtax and a high-income tax surtax. This article walks the defeated bill, the structural incidence of HST on Ontario households, the GST/HST credit and why it does not reach the middle class, and the honest caveats — including the fact that universally consumed goods cut in tax also benefit the wealthy in absolute-dollar terms.</strong></p>
<h2>What was actually on the floor</h2>
<p>**Bill 113 — the Fair Prices and Tax-Free Groceries Act, 2026** — was introduced in the Ontario Legislature by NDP MPP Tom Rakocevic earlier in the spring 2026 session. The bill had two distinct elements:</p>
<p>1. **Remove the entire 13% HST from all food and drink** sold in Ontario, including categories that currently carry HST (prepared meals, deli, snacks, restaurant meals, and many packaged products).
2. **End secret lease covenants** that allow major grocery chains — specifically Loblaws and Sobeys are named in the bill — to insert clauses into commercial leases that bar landlords from renting to competing grocery stores in the same plaza or neighbourhood. These "restrictive covenants" are documented mechanisms that have suppressed grocery-market competition in Canada.</p>
<p>On May 27, 2026, the bill was put to a vote at second reading. The Progressive Conservative majority defeated it.</p>
<p>**Important factual clarification up front:** the bill was not about taxing apples and milk. Basic groceries in Canada — bread, milk, vegetables, meat, fish, eggs, fruit, dry staples — are ALREADY zero-rated under the Excise Tax Act. They carry no GST and no HST. The HST is applied to the FOOD CATEGORIES BILL 113 WOULD HAVE EXEMPTED: prepared meals (rotisserie chickens, deli salads, sushi), snack foods (chips, chocolate bars, ice cream), restaurant meals (eat-in or takeout), and many packaged convenience items. The "tax on groceries" framing is shorthand; the actual policy question is whether the tax on the SPECIFIC FOOD CATEGORIES that currently carry HST should be removed.</p>
<h2>The Liberal proposal — narrower</h2>
<p>The Ontario Liberal Party has a separate, narrower proposal: remove the **provincial portion of HST** (the 8% Ontario share, leaving the 5% federal GST in place) on prepared food purchases **under $20**.</p>
<p>The Liberals first announced this proposal in April 2022 under then-leader Steven Del Duca, and the party has continued to promote it. The party's own published cost estimate: approximately **$500 million per year in foregone revenue**.</p>
<p>The Liberal funding mechanism — also published in 2022 — was approximately revenue-neutral:
- A **1% corporate surtax** on companies operating in Ontario with annual profits exceeding $1 billion (estimated to generate about $150 million per year).
- A **2% personal income tax surtax** on individuals earning more than $500,000 per year (estimated to generate about $350 million per year).</p>
<p>The Liberal proposal is structurally different from Bill 113. The Liberal version is narrower (provincial portion only; prepared food only; under $20 only) and is paired with a published revenue-replacement plan. Bill 113 was broader (all food and drink) and did not accompany a detailed revenue-replacement mechanism — which is part of what the Ford government cited in opposing it.</p>
<h2>The math: how regressive is HST?</h2>
<p>The most recent published Department of Finance analysis of consumption-tax incidence — the Report on Federal Tax Expenditures, 2017 edition, Part 10 — provides the cleanest publicly-available data on how the GST falls across the income distribution.</p>
<p>**Federal GST as a share of disposable family income, by income decile** (2010 data, the most recent in the Finance report):</p>
<p>| Income decile | GST as % of disposable income |
|---|---|
| 1 (poorest) | **3.8%** |
| 2 | 3.5% |
| 3 | 3.4% |
| 4 | 3.2% |
| 5 | **3.1%** |
| 6 | **2.9%** |
| 7 | 2.8% |
| 8 | 2.7% |
| 9 | 2.7% |
| 10 (richest) | **2.1%** |</p>
<p>The pattern is unambiguous: as income rises, the share of disposable income going to GST falls. The poorest decile pays nearly **twice as much**, as a share of income, as the richest.</p>
<p>**For Ontario at 13% HST (rather than 5% federal GST):** the same incidence pattern applies, scaled. The first-order approximation is to multiply by 2.6 (because 13/5 = 2.6) — though the actual ratio is somewhat lower because not every taxable category carries the full HST at the same effective rate. A reasonable working estimate for Ontario HST burden:</p>
<p>| Decile | Federal GST % | Estimated HST % |
|---|---|---|
| 1 (poorest) | 3.8% | **~7-9%** |
| 5 (middle) | 3.1% | **~5-7%** |
| 10 (richest) | 2.1% | **~4-5%** |</p>
<p>For a middle-class Ontario household earning $80,000 per year with approximately $60,000 of disposable income, the HST burden lands at roughly **$3,000-$4,200 per year**. That is real money — about a month's rent in most Ontario markets.</p>
<h2>Why sales tax is regressive — the simple explanation</h2>
<p>Consumption taxes are regressive because of how households at different income levels spend their money.</p>
<p>A low-income household spends nearly 100% of its income on consumption — there is little or no surplus to save or invest. So nearly every dollar of income is exposed to consumption-tax incidence.</p>
<p>A high-income household spends a much smaller share of its income on consumption. The rest goes to savings, investments, mortgages on appreciating assets, retirement accounts, and other non-consumption uses. Those uses do not attract sales tax. So a smaller share of income is exposed to consumption-tax incidence.</p>
<p>The MIDDLE CLASS sits between these — but materially closer to the low-income pattern than to the high-income pattern. Most middle-class households spend the majority of their income on consumption (housing, food, transportation, clothing, services), so most of their income is exposed to sales tax.</p>
<p>This is not a partisan claim. It is the structural arithmetic of consumption taxes, and it applies to every value-added tax in every developed economy. The Department of Finance's own analysis explicitly states the regressivity in its tax-expenditure report.</p>
<h2>The GST/HST credit — designed to fix this, doesn't reach the middle class</h2>
<p>The federal government has a mechanism intended to offset the regressivity of the GST/HST: the **GST/HST credit**, a quarterly tax-free payment from the Canada Revenue Agency.</p>
<p>Current maximum amounts:
- **Single adult:** $519 per year
- **Couple:** $680 per year
- **Per child under 19:** $179 per year</p>
<p>The credit is **income-tested.** It begins to phase out at roughly $44,000 of adjusted family net income for a single individual (about $58,000 for a family) and is fully phased out by approximately $54,000 for a single individual.</p>
<p>**For a middle-class earner** — say a single Ontario worker earning $70,000 per year, or a family earning $100,000 — the GST/HST credit is **$0**. The middle class pays full HST with **no rebate offset**.</p>
<p>This is the structural feature that the grocery-tax debate is really about. The bottom of the income distribution gets the GST/HST credit. The top of the income distribution barely cares about consumption tax. The MIDDLE pays full freight with no offset, and the middle is where most Canadian voters live.</p>
<p>(Note: the federal Canada Groceries and Essentials Benefit will replace the GST/HST credit starting July 2026, with similar income-testing. The phase-out architecture is similar.)</p>
<h2>What HST on food specifically buys for a middle-class household</h2>
<p>A working example. Take a middle-class Ontario family of four — two adults, two children, household income $110,000, no GST/HST credit.</p>
<p>Monthly food spending breakdown, rough but typical for this household profile:
- Basic groceries (zero-rated): ~$700 → no HST
- Prepared / packaged / snack items (HST): ~$200 → about $26 in HST per month
- Restaurant + takeout meals (HST): ~$300 → about $39 in HST per month</p>
<p>Monthly HST on food alone: approximately **$65**. Annual: approximately **$780**.</p>
<p>Add in HST on everything else this household consumes — clothing, household goods, electronics, restaurant meals not yet counted, services — and the total annual HST burden for this household is in the $3,500-$5,000 range.</p>
<p>**Bill 113 would have eliminated the food-and-drink portion** of that ($780-$1,200 per year for this family). The Liberal proposal would have eliminated about half of that (the provincial 8% portion, on prepared food under $20).</p>
<p>These are not small numbers for a household budget. They are not life-changing either. They are the order-of-magnitude that grocery-tax debates are about.</p>
<h2>The honest "yes but"</h2>
<p>Several real counter-arguments deserve fair air-time.</p>
<p>**Universal tax cuts also benefit the wealthy in absolute dollars.** A high-income family that buys $5,000/year of taxable food gets the same 13% rate cut as a middle-class family that buys $2,000/year — meaning the dollar benefit is bigger for the wealthy household, even though the income-share benefit is smaller. This is true of any consumption-tax cut. Targeted income-tested benefits (like an expanded GST/HST credit) reach the same income levels MORE efficiently per dollar of foregone revenue.</p>
<p>**Revenue replacement matters.** Bill 113 did not come with a detailed revenue-replacement plan; the Liberal proposal did (corporate surtax + high-income surtax). Without revenue replacement, the foregone HST has to come out of program spending or be borrowed. The Ford government's public position has emphasized this.</p>
<p>**Broad-based income-tax cuts may be more progressive per dollar.** A reduction in the personal income tax rate at the bottom or middle brackets reaches the same households with less administrative complexity than a category-by-category HST carve-out. Reasonable tax economists have debated this trade-off for decades.</p>
<p>**The competition piece of Bill 113 is independent of the tax piece.** Banning restrictive grocery-chain lease covenants is a competition-law question, not a tax-policy question, and the case for it stands or falls on its own merits (the Competition Bureau has flagged restrictive covenants as a real barrier to competition in Canadian grocery retail). Linking it to the tax question in a single bill may have made the bill harder to pass.</p>
<p>None of these counter-arguments invalidates the underlying regressivity math. They argue about what the BEST POLICY RESPONSE to the regressivity is — not about whether the regressivity exists.</p>
<h2>The bottom line</h2>
<p>On the documented federal Department of Finance data: sales tax is structurally regressive. The poorest 10% of Canadian households spend nearly twice as much, as a share of disposable income, on the GST as the richest 10%. Ontario's 13% HST scales the burden up across the same gradient.</p>
<p>The GST/HST credit offsets this for low-income households but fully phases out before reaching the middle class, which therefore pays full sales tax with no rebate.</p>
<p>Bill 113 — the Ontario NDP's defeated grocery-tax bill — would have eliminated HST on the food categories that currently carry it (prepared, snack, restaurant, deli, packaged), disproportionately benefiting middle-class households in income-share terms. The Ford PC government defeated it on May 27, 2026, citing revenue and policy-design concerns.</p>
<p>The Ontario Liberal Party has a narrower, revenue-neutral proposal targeting prepared food under $20.</p>
<p>Whether the political response to consumption-tax regressivity should be category-specific HST cuts, an expanded GST/HST credit, broad-based income-tax reductions, or some combination, is a legitimate policy debate. What the documented data does NOT support is the claim that sales tax is neutral across income levels. It is not. It falls hardest on those with least; it falls disproportionately on the middle; it falls lightest on those with most.</p>
<p>Parliament Audit publishes the math.</p>
<hr />
<p><small>
Originally published by <a href="https://parliamentaudit.ca/news/ontario-grocery-tax-defeated-sales-tax-middle-class-incidence">Parliament Audit</a>
under the <a href="https://creativecommons.org/licenses/by-nd/4.0/">CC BY-ND 4.0</a> license.
<img src="https://parliamentaudit.ca/api/republish-beacon?slug=ontario-grocery-tax-defeated-sales-tax-middle-class-incidence" alt="" width="1" height="1" />
</small></p>
</article>