A state of perfect disharmony

By Andrew Coyne - Thursday, September 29, 2011 - 8 Comments

COYNE: You’d think provinces would not have to be bribed to act in their own interest

So the harmonization comedy continues. Scant weeks after the people of British Columbia, in a magnificent fit of self-destructive fury, voted to unharmonize their provincial sales tax from the now-misnamed Harmonized Sales Tax, word came that talks between Ottawa and Quebec on a plan to compensate the province for harmonizing its own tax were at an impasse.

You could tell the talks were at an impasse because the two sides put out a press release announcing the talks were going swimmingly. “HST and QST harmonization,” it read: “Discussions proceeding normally.” And so they were, if by “normally” you mean sailing past the Sept. 15 deadline for an agreement to which the federal Conservatives had pledged themselves in the recent election campaign. The most they would say now is that they hoped to have a deal by the end of the month.

Mind you, it was always a mystery just what they had to talk about, the feds having already promised, publicly and often, to yield to Quebec’s demands. They’d even named the figure, $2.2 billion—by a remarkable coincidence, the very sum the Charest government had asked for at the start. What was there left to negotiate?

Continue…

'A price solution for an income problem'

By Aaron Wherry - Tuesday, October 26, 2010 at 1:08 PM - 0 Comments

Stephen Gordon questions the NDP call for a tax break on home-heating costs.

If we’re concerned about the income problems associated with home heating costs – the affordability issue – the proper remedy is an income solution: give more money to low-income households. If we’re concerned about whatever price problems there may be, the proper remedy involves increasing the cost of GHG-emitting home heating. And if we’re concerned with both, we can implement both remedies simultaneously: increase the cost of home heating and give more money to low-income households.
Idea alert

By Aaron Wherry - Monday, October 4, 2010 at 11:35 AM - 0 Comments

Jack Layton pitches tax relief.

The federal NDP wants Ottawa to scrap the federal portion of sales taxes on home heating: The 5 percentage points levied by the Goods and Services Tax or the federal portion of the Harmonized Sales Tax applied in many provinces. The NDP estimates it would cost Ottawa $700-million in foregone revenue.

Mr. Layton’s proposal also twists the political knife, though, blaming the rise in home heating costs on the introduction of the HST in Ontario and B.C. The new tax combines the GST and provincial sales tax but also means a sales tax hike for consumers because it is charged on many products which didn’t incur PST before.
A few kind words for harmonization

By Andrew Coyne - Monday, November 23, 2009 at 4:40 PM - 51 Comments

ANDREW COYNE: It isn’t a tax grab. Prices won’t increase. So why all the fuss?

Do the people leading the charge against harmonizing the sales taxes of B.C. and Ontario with the federal GST imagine this is the first time such a reform has been introduced? Do they suppose the public does?

It would be one thing to attempt to whip the population into hysterics against a “risky, untried scheme” that had never been implemented elsewhere. It would be tiresome—essentially an endorsement of the doctrine that Nothing Should Ever be Done for the First Time—but it would at least be coherent, as demagoguery goes.

But the forces arrayed against the plans to convert the two provinces’ existing sales taxes next July into a broader, GST-style value-added tax—a ragtag army of special interests and opposition parties that includes the federal NDP and the National Citizens Coalition, the Ontario NDP and the Ontario Progressive Conservatives, the B.C. NDP and Bill Vander Zalm—must confront the troublesome fact that four provinces (Quebec, Nova Scotia, Newfoundland and New Brunswick) have already done so, without ill effect. And not only them: at last count, 143 countries around the world had implemented similar value-added tax regimes. Not one of them has renounced them.

Continue…
Two-part harmony

By Aaron Wherry - Wednesday, October 7, 2009 at 1:24 PM - 45 Comments

Jack Layton, in QP yesterday, wondering if Stephen Harper agrees with his previous self.

Mr. Speaker, the NDP was opposed to the GST when it was first brought in, and we have opposed the HST for a long time. Other members of the House used to oppose the HST as well. Let me quote from a member who is an economist: ‘This harmonization of the GST, this tax collusion between provincial and federal governments, is not the way to reverse the economic decline of this country.’ Who said that? That is a quote from the Prime Minister during the inaugural debate on the HST. Why does he now think that this collusion to impose a new tax is a good idea?

Mr. Harper’s full remarks of Dec. 10, 1996 are here.
Jim Flaherty Maverick Watch

By Aaron Wherry - Saturday, September 19, 2009 at 11:20 PM - 28 Comments

Days after a report that he’s been told to zip it, the Finance Minister dares express his personal opinion on sales tax harmonization.

Harmonization of the federal GST with provincial sales taxes remains the most important thing provinces can do to improve their competitiveness, says Federal Finance Minister Jim Flaherty.

“It’s good longterm economic policy for the people of Canada,” Flaherty said in Brampton, Ont., on Friday at the launch of the city’s new rapid transit bus service called Zum.
Shush now, Jim

By Aaron Wherry - Wednesday, September 16, 2009 at 11:44 AM - 29 Comments

Jim Flaherty, March 30. Last week, Ontario’s Liberal government, after objecting to the combined tax for years, decided to switch. Ottawa agreed to help Canada’s most populous province with that move by giving Ontario one-time compensation of $4.3 billion. ”I think this is very good economic policy,” Flaherty told reporters in Ottawa Monday. “This is a massive tax cut, a $5 billion tax cut for businesses in the province of Ontario and that means job creation and investment in the province of Ontario. So, this is very good economic policy over time.”

Toronto Star, today. Finance Minister Jim Flaherty and fellow Conservatives are distancing themselves from the harmonized sales tax as public angst grows over the price hikes it will mean on everything from fast food to funerals … federal Conservative sources have told the Star that earlier in the summer, officials in Prime Minister Stephen Harper’s office ordered Flaherty to tone it down. ”They asked Jim to stop talking about (the tax) so much because it’s not helpful,” said one insider.
Jim Flaherty's permanent tax on everything (II)

By Aaron Wherry - Thursday, August 20, 2009 at 7:21 PM - 25 Comments

Jim Flaherty, April 10, 2008. We’ve done our stimulus at the federal level but we really needed the province to do its part, and of course we’re also calling on the remaining provinces that have not harmonized their PST with the GST to work with us to accomplish that goal of harmonization. That would be a great tax burden relief for businesses in Ontario that’s certainly needed.

Jim Flaherty, Oct. 23, 2008. Being from Ontario, as you may have heard, I have a bit of a challenge with my provincial government and I’m gently nudging Premier McGuinty and the Government of Ontario and encouraging them in the direction of reducing the burden of business taxes in that province and, importantly, since that province and a few others are not harmonized, to harmonize the PST and the GST in those provinces, which would be the single most important step that could be done to help relieve the tax burden on business … we need harmonization of sales taxes in some provinces.

Dimitri Soudas, tonight. “If any Ontarian is concerned about this provincial decision (on tax harmonization), they should contact his or her MPP … We said that we would accept the decision of any provincial government to proceed with the harmonization of the sales tax, but ultimately the decision is a decision that needs to be made by the provinces.”
GST cuts, harmonization and other blessings in disguise

By Charlie Gillis - Monday, March 30, 2009 at 8:09 PM - 13 Comments

The case for cutting consumption taxes

When the federal Conservatives promised two years ago to cut the GST, Canadian economists replied with a single voice. Or so it seemed. Cutting consumption taxes is regressive, many warned, because it rewards the rich with proportionately greater discounts (two per cent off the price of a BMW, they reasoned, is worth a lot more than two per cent off a Chevy Cavalier). Better to provide targeted income tax cuts, they said, to the earners you hope to help.

Yet average Canadians seemed pleased with the relief. They rewarded the Tories with consecutive minority governments, while a proposal by then Liberal leader Stéphane Dion to restore the GST fell flat. The current Grit leader Michael Ignatieff has said he will leave the cuts in place if elected.

Continue…