Dalton McGuinty, the premier for Ontario, says there is no need to hold any public hearings on its plan to harmonize the provincial sales tax with the federal GST in July of 2010, because voters will be able vote on the subject in the 2011 provincial election. Does anyone else have any trouble with that math? The Liberals don’t care that there will be no say on the matter, because as far as they’re concerned by the time they have to pay for their unilateral move, the HST will have been implemented for a year already.
Mr.McGuinty did the same thing with the provincial health premiums in 2004, when he broke an election promise not to raise taxes to the voters of Ontario. And sure enough, by the time the elections came around in 2007, enough Ontario voters had forgotten about the tax hike and the Liberals were rewarded with another majority mandate.
The federal Conservative government has already come to an agreement with the provincial Liberals on the HST, including the sizable $4.3 billion payout to lubricate the deal. The Liberals have admitted this is as much a cash issue as anything else:
“The feds certainly pushed us; they’ve given us 4.3 billion reasons to do it,” said Ontario Finance Minister Dwight Duncan.
“There are always rats in these debates, and it’s fun to be watching those individuals who are trying to deny the $4.3 billion their government is giving us.”
Interesting how Mr.Duncan makes it look like HST detractors are trying to deny Ontario it’s $4.3 billion gift, rather than save Ontarians from paying 13% on every item in the province. The Liberals have already tried to cushion the blow in the same way the B.C. Liberals did for their infamous carbon tax here, by offering a $1,000 rebate to families to cover the added costs of the HST.
But B.C. is in even worse shape than Ontario when it comes to public consultation, unable to answer simple questions, such as what school boards are expected to do to cover an expected $40 million shortfall because of increased costs resulting from the HST. TD Economics estimates that 20% of expenditures for B.C. residents will increase by 7%, leading to an average increase in household costs of $840 in taxes. The tax is also expected to add 0.7% to the inflation rate in the province as the cost of almost everything will rise.
Both Premier Dalton McGuinty and Premier Gordon Campbell have told voters that they will be judged on the merits of the HST at some future election date. But that’s a rather disingenuous statement to make, since it implies that removing the tax will be as easy as it was to implement. The contracts between the federal government and provinces implementing the HST stipulate that any breach of the contract would forfeit the federal transfer payments made to “ease” the transition of the HST. So while consumers will be hit hard by the new tax, any attempt to change the agreement before 2015 will result in a forfeiture of the federal cash. That makes Mr.McGuinty’s glib remark about voters deciding on the HST in 2011 practically irrelevant. The damage will already have been done.
Not only is the HST likely to increase the burden on Canadians in the provinces that implement it, they would also surrender their taxing authority and rely on the federal government for transfer payments to receive income. Budget shortfalls could result based on any delay in federal transfer payments to the provinces. So when the provinces hand over control of tax autonomy, they do so with the hope that the federal government will come through promptly with the money they need. Ask the municipalities of Canada what they think of the similar arrangement they have with the province.
The Liberals in Ontario and B.C. are hoping to push this through quickly, and then hope that taxpayers forget all about it. And although Dalton McGuinty may certainly get his election test in 2011, there’s no chance it will change anything pertaining to what will probably become a new permanent tax in Canada.
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