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"Well," I replied,
"because I live in Alberta where we don't have a PST to combine with the GST."
But if I lived in
Ontario, I would hate it. If I were an Ontarian, I'd be livid, especially after
Premier Dalton McGuinty's confession earlier this week that his new hybrid tax
will be far from revenue-neutral. Once the new tax kicks in in a couple of
months, the average Ontario family can expect to pay at another $800 a year in
taxes. Some think-tanks predict the increase will be even more - closer to
$1,200 a year for an average family of four making $60,000 annually. That's an
extra 2% of a family's income into the clutches of the provincial treasury.
All along, Mr. McGuinty and his government have insisted the switch from a PST
and the GST to a single HST would not cause individuals' or families' taxes to
go up. From the very beginning, this was a myth, and those pushing the HST had
to know it.
Marrying the PST with the GST, was always going to expand the number of items
and services on which the PST would apply. Since the Ontario government was not
at the same time lowering its tax rate, there could never have been any other
possible outcome for Ontarians: The annual amount of tax paid would have to go
up.
Just as he did when he backed down on the no-new-taxes pledge he made to get
elected the first time in 2003, Premier McGuinty has reneged another a major tax
promise to Ontarians. But I'm sure he's not worried. Ontarians re-elected him
the last time. So he was probably convinced himself he will win office again
this time despite his recent admission this new tax is going to gouge like
crazy.
I know all the reasons why sales taxes - i.e. consumption taxes - are to be
preferred to income taxes. Every economist I respect believes consumption taxes
are better because they let the taxpayer control the amount of tax he pays.
Don't want to pay as much? Don't buy as much.
But to an ordinary person, this is a silly argument. Everyone has to buy stuff -
school clothes for the kids, a new car, a laptop. If your washing machine breaks
down, you have to buy a new one or pay for repairs. There is no alternative but
to pay the sales tax.
To consumers, a sales tax looks like the least avoidable kind of tax. For most
people, the only true way around a consumption tax is to hid their spending by
switching to cash, barter or the black market.
On paper, I agree with my economist buds. And if we lived on paper, I might try
to convince you to learn to love the HST.
The Atlantic provinces
have had sales taxes mated to the GST for more than a decade, with impressive
effects. University of Toronto economist Michael Smart estimates, for instance,
that once Atlantic businesses had just one tax to pay, one form to fill out, one
taxman to satisfy, "annual investment in machinery and equipment in the
harmonizing provinces rose 12.1%."
That's good for an
economy.
The trouble is that what looks like a single tax to business, appears to
consumers and taxpayers to be an additional tax. The HST is not coming with a
corresponding decrease in personal provincial income tax. It is coming on top of
existing taxes.
It is nothing more than another grab from the pockets of hard-pressed taxpayers.
Now even Mr. McGuinty is admitting as much.
Source:
National Post (blog),
Canada, dated
07/05/2010
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