At a time when governments should be lending a hand to its citizens, we’re getting just the opposite. This week’s Ontario budget is no exception.
The most controversial issue is a plan to harmonize the provincial sales tax with the federal GST, a massive tax grab pitched as a boon for the beleaguered business sector. To be sure, the proposed HST would prove convenient while keeping some additional dollars in the coffers of industry. Consumers, on the other hand, will be paying an additional eight per cent on a whole raft of items currently taxed at the five-per-cent GST level.
To soften the blow for the proposed 2010 introduction of an HST, the McGuinty government is floating the idea of sops such as a one-time payout of $1,000 to families.
The federal government, which has been pushing all of the remaining provinces – Quebec, Newfoundland, New Brunswick and Nova Scotia are already onside – to harmonize the sales taxes, is offering billions in compensation to make the deal more palatable.
The idea is predicated on the savings that will come from efficiencies, as businesses will see taxes drop and will face a more streamlined tax reporting and remittance process. There are advantages to that. But consumers certainly shouldn’t expect to see those savings passed on to us: The same promise was made when the GST replaced the manufacturers’ sales tax, but prices only went up.
Of course, the biggest hindrance to McGuinty’s sales job is the timing. It hasn’t escaped anyone’s notice that we’re in a recession, and now seems an awfully odd time to start talking about the harmonization the province has shunned for years.
Not surprisingly, there is no talk of making this change revenue-neutral – both the province and the feds will rake in more money. If McGuinty wants to make the change, he can start by reducing the PST rate to ensure the government collects no more in sales taxes than it does today. Or adjust income taxes to offset the extra costs we’ll all be paying. In either instance, a reduction in government spending is in order, starting with the elimination the entire department responsible for collecting PST, rendered redundant by harmonization.
It would seem futile to hope for cuts even as the province is pledging tens of billions in stimulus spending, including $27.5 billion over two years for roads, schools, hospitals and transit –ironically, all involving public sector workers, the very place cuts must come to balance the budget and to return fairness to the tax system.
In the big picture, harmonizing the sales taxes would be the latest in a string of changes to remove taxes from businesses and place them on individuals. That was the real reason behind the GST, ongoing adjustments to property tax rates, free trade and the trickle-down rationale behind cuts to corporate tax rates, to name a few.
Proponents, the biggest special interest group of all, claim the moves make businesses more competitive, often citing job creation and reduced prices, benefits that rarely surface. Critics, on the other hand, have documented these tactics as no more than a race to the bottom, allowing corporations to flit over borders easily and to work the system to minimize already shrinking tax levies.
Ontarians certainly deserve better than acquiescence to that agenda.
