An unlikely pair of political foes came together Wednesday, vowing to fight the McGuinty government’s Harmonized Sales Tax (HST) set to take effect next July. The Tories and New Democrats stood side by side on a covered makeshift stage as they rallied support on the front lawn of Queen’s Park in front of a few hundred supporters.
“This alliance was made possible with the willingness of both political parties to set aside party politics and work with us on this important issue of common concern for the benefit of taxpayers in Ontario,” said spokesperson Jim Garchinski of the Public Sector Retiree Coalition. “We’re all vehemently opposed to this HST by a government that is about to unilaterally force another massive tax grab on the citizens of Ontario.”
Garchinski guaranteed that there would be no harmony if the McGuinty government imposes this “horrible sales tax which may turn out to be the largest tax increase in the history of this province.” He reminded supporters that the public is still reeling from the Ontario Health Care premium, which the Coalition viewed as another tax grab from a government that promised no new taxes when it came to power in 2003.
“The money didn’t even go to health care,” he said, “and went to general revenues to fund roads and other infrastructure projects.”
While the McGuinty government has tried to convince the public that the HST is good for business, the province and all Ontarians, by offering rebates of up to $1,000 in the first year only, Garchinski and his supporters believe that the GST will only leave taxpayers with deeper holes in their pockets.
“This tax is not good for seniors, not good for students, not good for low and middle income earners,” said Garchinski. “Big business and this government will be the only ones to benefit.”
Earlier this year, McGuinty agreed to combine both the provincial and federal sales tax on products and services. The combined tax of five per cent GST and eight per cent Ontario sales tax won't change the price on most items. But many items that used to be exempt from sales tax will no longer be so.
Under the new scheme, electricity will no longer be exempt from provincial sales tax, nor will tobacco, personal services like haircuts, membership fees for clubs and gyms, newspapers and magazines, taxi fares and the professional services of lawyers, architects and accountants. Real estate commissions will also be taxed.
The CBC reported that the province says implementation of the single sales tax would bring Ontario into line with "what is viewed as the most efficient form of sales taxation around the world." The finance ministry says the single sales tax would reduce the cost of goods that Ontario exports, making the province more competitive and boosting a sector of the economy that has been particularly hard hit by the economic downturn.
At the moment, businesses may not deduct the PST from the cost of materials and other products they buy; instead, they pass the cost along to consumers. But under harmonization, businesses may claim tax credits for those purchases, which some estimates suggest could save them $3-billion a year.
“We know that this government is also planning to apply the HST to mutual fund fees and in the process more than double the tax you pay on investments,” said Ontario PC leader Tim Hudak. “That’s a tax on your retirement savings and the financial security and peace of mind of seniors and retirees in Ontario.”
Hudak added that he and his caucus are putting all of their energy into stopping “this greedy, McGuinty tax grab dead in its track.” But he emphasized the need for parents, small business owners and retirees to get involved in order to win this battle.
NDP leader Andrea Horwath, like Hudak, believes the HST is the wrong thing to do to the people of Ontario. She and her colleagues have traveled across the province since the McGuinty government announced its plans to harmonize the sales taxes. “There are fellow Ontarians in every single community who are with us on this fight,” she said.
“Bringing a HST to this province will hurt people when they are already down. People cannot afford eight per cent more. Shame on Dalton McGuinty for being so out of touch with the people of Ontario. And shame on Stephen Harper. And if there’s one thing the Ontario Conservatives can help in this fight with is to get their federal cousins to back off of the HST as well.”
That’s because New Democrats believe that the HST is a Dalton and Harper tax.
“And it’s extremely important to remember that,” she said, “because the federal government is sweetening the pot with billions and billions of our dollars to get this government to go along with the harmonizations of sales taxes.”
At the same time that the Liberals embrace a harmonized sales tax, Horwath noted that the McGuinty government is bringing in a $4.5 billion tax giveaway to the province’s biggest corporations.
“So while the little guy gets hit, the big guy gets a free ride,” said the NDP leader. “It’s been happening for decades now. Corporations get the big breaks and the rest of us carry the burden on our backs.”
Horwath also quoted the Ontario Chamber of Commerce sales tax reform report that, she said, will lead to the loss of 40,000 jobs in the province. But in their letter of October 21 to Hudak and Horwath, the Ontario Chamber of Commerce had this response:
It is likely due to the complexities of this issue that our report, Made In Ontario, The Case for Sales Tax Harmonization, has been consistently misunderstood and erroneously quoted in recent weeks. Specifically, it has been reported in several media that our report concluded sales tax reform will lead to the loss of some 40,000 jobs in the province.
Let the record show that this narrow interpretation of the report is categorically not true.
In the context of employment growth, the report examined the increase in employment over the next 25 years, relative to the status quo. The analysis clearly showed that employment will continue to grow, albeit at a slightly lower rate than the status quo, depending on which of the report’s options the government adopted. In fact, the report explicitly states that the level of employment does not decline as a result of sales tax reform.
Yet Horwath remained adamant in her opposition to the HST.
“It’s a job killing tax,” she said. “It’s a tax that’s going to negatively affect the economy. It cannot be foisted on people when they can least afford it, at a time when we need economic stimulation and job growth. And they’re ready to do exactly the opposite with this tax.”
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