HST

December 17, 2009

In recent weeks I have received numerous inquiries regarding the Ontario Government’s pending Harmonized Sales Tax. 
 
It has not gone unnoticed that members of the Ontario Government and others are attempting to confuse the public by saying the Federal Government supports this tax grab. Let me be clear; I do not support this tax grab by the McGuinty Liberals. The Federal Government did not decide to harmonize Ontario’s PST with the GST. Adopted earlier this year, the Provincial Choice Act allowed each Province to choose how they govern their tax harmonization. The Act does not express support, outline exemptions or set Provincial tax rates. Those choices were made by Premier McGuinty and detailed in his budget.
 
Three of the Atlantic Provinces adopted HST on April 1, 1997. The Liberal Government under Jean Chretien solicited Liberal Governments in Nova Scotia, New Brunswick and Newfoundland to harmonize their sales taxes with the GST (7% at the time). As an incentive, the Federal Government offered to give the Provinces the savings from eliminating the dual tax collection bureaucracy. This provided them the opportunity to pass those savings on in the form of tax relief. The day prior to adoption, the Provincial sales tax rate in Newfoundland was 12.84% and in Nova Scotia it was 11.8%. When those Atlantic Premiers harmonized, they dropped their Provincial rates to 8% to help consumers.

Fast forward to today.  In this case, it is consequentially obligatory for our Federal Government to follow the precedent set by past Governments. We can not deny Ontario the savings given to other Provinces from the elimination of their tax collection bureaucracy.

In contrast to the Atlantic Provinces, it appears Ontario is using the savings from tax harmonization for general revenue. The Atlantic Provinces opted for tax savings, the McGuinty Government has opted for a tax hike. This approach is wrong. I submit that our Premier needs to show similar consideration for Ontarians. Why not reduce the Ontario PST by four percentage points?  We are just coming out of a difficult global economic recession. Most Ontarians strongly agree with me that we can not afford a major tax increase at this time.

At the very least, there should be certain exemptions allowed to the Provincial portion of the harmonized tax.  Items such as gasoline, home heating, condo fees, new home sales, funeral costs and even things like children’s registration fees for minor hockey should not be subject to a new form of taxation.  I am also concerned that Ontarians do not know exactly what will and will not be exempt. It is unsettling that officials suggest people call the department's general line with questions. I believe I can hear a collective groan across the Province when people hear the phrase “call the general line” uttered from Ontario Finance Minister Dwight Duncan’s office. 
I sincerely hope the Premier reconsiders his approach to harmonization and that he recognizes Ontario disagrees with his position. There is still time for him to do the right thing.

Patrick Brown – MP Barrie