In today's National Post, Niels Veldhuis and Charles Lammam, two economists at the Fraser Institute, wrote a column entitled "Don't believe the anti-HST rhetoric" (aka The HST is good for you. Yes it is, Is too). The column was written in response to the strong anti-HST movement in both Ontario, whose residents are defenceless against the tax, and British Columbia whose residents are opposing the tax through the use of a petition being undertaken under the province's recall legislation.
In the column, these gentlemen use the argument that the advantage to a value added tax like the HST is that "only the value added by the business selling the good or service is taxed." Businesses will receive an input tax credit (ITC) for their business inputs under the HST which will allow them to claim a tax refund for the sales tax they paid on their inputs. In a perfect world, the amount of this input tax credit is then passed along to the consumer; in the case of British Columbia and Ontario, the net change in the ITC will increase by the current amount of the provincial sales tax. If that is the case, the business should pass along their new 8% savings to the consumers of Ontario and 7% in British Columbia.
The fly in the ointment for this thesis is that far more items will be taxed under the new HST scheme. In British Columbia, the government proudly touts the fact that their new HST will be the lowest in Canada, however, it will now apply to a broader range of goods that were formerly exempt. Here's a line from the B.C. government HST blog: