Nothing about this tax adds up
Published on May 1, 2010 by Farah Kalbouneh
Ontario Revenue Minister John Wilkinson was in town for the second time this month on Monday, trying to allay fears that the HST will drive up prices and close down businesses.
Yet this is exactly what Wilkinson admitted could happen, noting that consumers must become more educated and demand lower prices – and if business refuse or are unable to lower them, well, there’s nothing the government can do. Apparently consumers, whose role in the economy functions on an individual basis, must now invent some way to work collectively together in order to hold businesses to account.
Inflation and stagnant wages have already whittled away the earning power of middle- and lower-class families in Ontario, and the Great Recession wiped out huge portions of retirement investment plans. According to the Globe and Mail, millions of Canadians are only an interest-rate hike away from complete financial ruin. The smallest bump in the road could lead to massive economic consequences.
The HST is that bump, and it is not just consumers who are at risk – many industries will be unduly punished by this tax. Currently, a cab fare is not taxed by the province: the HST will raise the cost of a trip by eight per cent (none of which goes to the driver), which will reduce the number of people taking cabs. Mutual funds and financial service companies based in Ontario similarly do not pay provincial tax: the HST will increase management fees by up to thirteen per cent, thus forcing companies to locate to more competitive tax environments.
Consumers will pay more and businesses will be taxed to a greater extent, which will somehow – according to the government – create jobs and lead companies to reduce prices if consumers are sufficiently organized? How does this make any sense?
A more compelling incentive to introduce the HST lies within the government itself. By handing over revenue responsibilities to the federal government, Ontario will be able to lay off thousands of employees and save billions of dollars in the long run. Added to this, Prime Minister Harper has offered rich financial bribes to any province which adopts the HST – $4.3 billion to Ontario and $1.6 billion to B.C.
Liberals and Conservatives stand hand-in-hand, forcing this tax down the throats of an unwilling public. Only New Democrats have opposed the HST consistently and unequivocally, because the last thing Canadians need right now is another tax.
I completely agree with you David. I think it is really sad that the government is putting pressure on businesses and forcing them to make these types of decisions. What is also upsetting is that Ontarians are being bribed by the government. The cheques sent to us will not make this tax affordable. The only thing it will do is take money out of people’s pockets and make life even more expensive!
Wilkinson’s attempts to allay fears about the HST’s detrimental effect on businesses is more about propaganda than about standing up for consumers or businesses. My dad, a self-employed lawyer, will have to pay more to Ontario’s government and take home less for the same amount he now bills clients. His having to choose between passing the HST onto clients or incurring the cost himself is a decision he won’t be alone in trying to have to make. And he will still be able to be in business, unlike some self-employed professionals who may have to close up shop because the HST will eat too far into their already-thin bottom lines.