Archive for the ‘Tim Hortons’ Category
Would you like additional tax with that coffee sir?
Every morning I stop at Tim Horton’s (for anyone outside of Canada, Tim Horton’s is THE coffee shop in Canada and can be found on almost every corner. There used to be competition between gas stations and Tim Horton’s while today one can find Timmie’s inside almost every gas station as well) Back to my story, I went to get coffee this morning and my son asked if I would get him one as well.
Every day the two coffees I buy on the way to work cost $3.30 or $1.65 each. Today, three coffees cost me $5.32. Even though I was still in my Sunday morning and not quite fully awake, a quick calculation in my head had me paying $2.02 for the third coffee. I asked the guy in the drive through window why this was and he replied, ahh, uhh, umm, I dunno. I replied, since you don’t know how about ringing through all 3 coffees separately just to see what you come up with. This was far more difficult for the young man to deal with than I thought as it would require him to use basic math to total the three transactions at $1.65 each. Rather than keep the other people in the line in a state of pre-Tim Horton’s delerium, I decided it was best to pay the $5.32 and ask questions later. So here I am with the solution. It is what I expected…taxes.
An extra-large coffee costs $1.57 before tax. If you buy a cup of coffee by itself, then with 5% GST it will cost you $1.65. (GST is the Canadian equivalent to the federal tax or VAT in some countries. When first introduced it was commonly known as the Gouge & Screw Tax) Food items under $4 ($3.99 or less) are PST exempt. (PST is our provincial tax, similar to the state tax in the US)
When I buy two coffees at $1.57 each the total is $3.14 (under the $3.99 limit) so subject only to GST and arriving at a total of $3.30. The addition of a third coffee brings the pre-tax total pretax total to $4.71, subjecting the total to both taxes, $0.24 GST and $0.37 PST for a total of $5.32.
Keep in mind that: It doesn’t matter how you get to the $3.99 threshold as long as the pre-tax total is greater than $4.00 then both taxes are applied to the entire amount, not just the amount over the $3.99. The same rules doesn’t apply if you buy 6 bagels for instance in which case neither tax is applied. Don’t ask…I will surely be writting another post questioning the absurdity of this.
Does it really make a big deal? Well, yes. If I did this every day, bought an additional coffee for either my son or the boss it would cost me an additional $0.37 per day or $135.05 per year. If by chance my daily bribe saw my boss’s overall view of me improve to the point of wanting to give me a raise it most likely would be worth it but that is a different story.
If every Canadian kept their morning coffee purchases to under $3.99 the Ontario government would lose $1,171,978 in one year.
More absurdities of the Canadian tax system:
A can of COKE – Taxed with PST & GST in a vending machine.
A can of COKE purchased alone in a restaurant – both PST & GST apply.
A can of COKE purchased with a muffin – now forming part of a meal under $4 – ONLY the GST applies.
A BAGEL – Taxed with ONLY GST in a vending machine.
A BAGEL – purchased alone in a restaurant – ONLY GST applies.
A BAGEL – purchased with a can of COKE – now forming part of a meal UNDER $4 – ONLY the GST applies.
A BAGEL – purchased with other items – now forming part of a meal OVER $4 – both PST & GST apply.
A BAGEL – When purchased in a quantity of SIX or MORE, wherever purchased – NEITHER GST or PST is applicable.
