The demise of the HST (III)

By Aaron Wherry - Monday, August 29, 2011 at 5:10 PM - 42 Comments

With the change now rejected by voters, the Harper government expects British Columbia to return the $1.6-billion in transition funding. The NDP thinks that would be unfair.

“Small businesses of all types suffered significant losses due to the HST,” said NDP BC Caucus Chair Don Davies. “It would be both spiteful and damaging for Harper to now force BC to pay back $1.6 billion, after it was already invested in things like health care and education.”

The demise of the HST (II)

By Aaron Wherry - Monday, August 29, 2011 at 2:21 PM - 11 Comments

Frances Woolley considers the merits of stealth taxation.

The federal GST or goods and services tax is a case in point. The GST is a value added tax. It replaced a particularly dysfunctional (small base, high rate) manufacturer’s sales tax. Almost all economists considered the GST superior to the old sales tax. However it was extremely unpopular among the general public. The reason is simple: the old manufacturer’s sales tax was invisible, so people couldn’t tell how much they were gaining when it was eliminated. The GST was visible, so people could see the increase in their tax liabilities. As a result, they over-estimated the net impact of the GST on their tax liabilities. (To be fair, people weren’t entirely stupid: manufacturers were slow to pass on the tax savings created by the elimination of the manufacturer’s sales tax.)

Rosen et al argue that “Most economists view the visibility of the GST [goods and services tax] as one of its beneficial characteristics.”  The political opposition to the GST and now the HST (harmonized sales tax) should make “most economists” reconsider this view.

The demise of the HST

By Aaron Wherry - Monday, August 29, 2011 at 10:44 AM - 30 Comments

Stephen Gordon considers British Columbia’s rejection of the HST.

For an economics professor who has spent much of the past six years trying to bridge the wide — and apparently broadening — gap between what is known to economists and the talking points that are the stuff of politics, the B.C. HST referendum is an unsurprising disappointment.

Let's try this again

By Aaron Wherry - Monday, June 6, 2011 at 4:17 PM - 6 Comments

Finance Minister Jim Flaherty has now tabled the second version of the 2011 budget—the prepared text of Mr. Flaherty’s speech to the House is here.

The two new measures are, as expected, $2.2-billion to complete a tax harmonization agreement with Quebec and an end to the per vote subsidy for political parties.

It will surely come as some surprise that neither the New Democrats nor the Liberals seem keen to support the budget.

Conservative-Bloc Coalition Watch

By Aaron Wherry - Wednesday, January 12, 2011 at 4:25 PM - 91 Comments

The Conservatives might be ready to cut a deal with Quebec, which might be enough to pass the 2011 budget with the support of the Bloc Quebecois, with whose support the government was able to pass the last implementation bill of the 2010 budget.

All of which would, at the very least, appease Conservative concerns about a “needless” election.

Ad Hoc Parliamentary Reform of the Week

By Aaron Wherry - Tuesday, November 24, 2009 at 11:37 AM - 6 Comments

If the government won’t answer your requests in Question Period, leave.

Frustrated by Premier Dalton McGuinty’s refusal to hold public hearings on the controversial 13 per cent HST, the 25-member Progressive Conservative caucus stormed out of the Legislature’s daily question period today shortly after it began.

“You have lost touch,” Conservative Leader Tim Hudak told McGuinty before the stunt took place, accusing the Liberals of being afraid of a public backlash over the tax. ”If Premier McGuinty is going to show that level of contempt for taxpayers by forcing through the largest sales tax grab in the history of this province without any kind of public hearings . . . we see no point in proceeding with question period today.”

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.”