The Canadian New Democratic Party (NDP) has devoted much of its energy in recent months to opposing the implementation of the Harmonized Sales Tax (HST) in Ontario and British Columbia. The new taxes came into effect on July 1, 2010. The HST merges the Goods and Services Tax (GST) with the Provincial Sales Tax (PST) in both provinces. Items covered by the GST that were previously exempt from the PST are included under the new HST.
Much of the Canadian left has been supportive of the anti-HST campaign on the grounds that consumption taxes are regressive (i.e. people pay the same rate of tax regardless of income).
In contrast, it will be argued here that while left critics of the HST raise a valid point about neoliberal tax policies shifting the tax burden away from business, the campaign against the HST is misguided, for two main reasons. First, the anti-HST campaign dangerously dovetails the rhetoric of the right and serves to foment anti-tax sentiment among the general population. Second, the implementation of a series of social democratic reforms necessitates the use of consumption taxes. As the example of the Nordic social democracies shows, consumption taxes play a key role in terms of financing welfare states and redistributive measures. Defending and expanding progressive taxation must remain a top priority, but progressive taxation alone is insufficient.
A tax shift
A central concern of the NDP's anti-HST campaign is that its implementation coincides with the implementation of tax cuts for business. They correctly note that this results in a higher proportion of taxpayer revenues will come from individuals, and less from business. Since any revenue gains are scuttled away by the tax relief for corporate and personal income tax cuts, the HST package can be said to represent a tax shift rather than a tax increase.
Indeed, there is no shortage of anti-corporate rhetoric in the NDP's anti-HST campaign. Federal leader Jack Layton stated recently that "I'm really pleased that people... are recognizing this is not money being collected from hard-working families to go into healthcare and education... it's a tax cut to business. It's a wealth transfer." Similarly, Ontario NDP (ONDP) leader Andrea Horwath stated: "We actually think this tax is the wrong thing to do. It shifts the burden of responsibility for taxation off of corporations again, which is something we've been doing for decades."
According to a study conducted by the Ontario NDP, the HST will raise between $4.7 and $5.9-billion in 2011, but the government would collect less in overall revenue. The average family would pay $792 more in taxes, or $470 when factoring in tax cuts. Low income families, however, would come out slightly ahead due to transfers.
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Echoing the right-wing anti-taxers
In addition to the NDP, there has also been a right-wing campaign against the HST. In Ontario, the provincial Conservative Party under Tim Hudak has campaigned aggressively against the tax. In B.C., former right-wing Premier Bill Vander Zalm is the most prominent figure in the anti-HST movement. The right-wing National Citizens Coalition (NCC) has come out against the HST as well.
Globe and Mail columnist Adam Radwanski, writing about the situation in Ontario, praised the NDP's anti-HST campaign:
"The message of Andrea Horwath's party against the new harmonized sales tax, which took effect on Canada Day, has not been quite as simplistic as that of Tim Hudak's Conservatives. But it's often been more convincing.
"For one thing, the NDP isn't conflicted by federal cousins who partnered with Dalton McGuinty's Liberals to implement the new tax. Instead, it's tied to the only party in Ottawa that firmly opposed the policy.
"For another, the NDP's position actually makes sense. The Tories have claimed the HST is a ‘tax grab,' which it's really not. The NDP more accurately argues, at least sometimes, that it's a shifting of the tax burden from businesses to individuals. And that's something that, alone among the parties, it can very strongly and credibly oppose."
The key phrase here is "at least sometimes." In fact, the NDP's campaign against the HST has largely been indistinguishable from that of right-wing opponents of the tax. The slogan for the ONDP anti-HST campaign is "Stop the Unfair Tax Grab." Visitors to the ONDP's "Unfair Tax Grab" website are reminded that such things as using the Internet, putting gas in the car, buying a newspaper or a coffee, etc., will now cost 8 per cent more. The federal NDP runs a similar website -- "Block the HST" -- where we are told that while Stephen Harper's Conservatives are "Making Life More Expensive," Layton's New Democrats will "Make Life More Affordable" by scrapping the HST. You can even go to the "Harper HST Calculator" to find out how much more the HST is going to cost you.
The anti-HST website of the Ontario Tories -- Stop Dalton's Sales Tax -- is remarkably similar. We are told that "Ontario families will pay more for countless items from gas for your car to home heating bills thanks to Dalton McGuinty's HST tax grab" and that "It will hurt Ontario families when they can least afford it." The site also features an "HST calculator." The central message of the NDP's campaign against the HST -- that "ordinary Canadians" already pay enough in taxes -- is a theme that has long been used by the right in its ideological crusade against taxation and "big government."
Popular opposition to the HST is much more widespread in BC than in Ontario, perhaps due to the fact that Premier Gordon Campbell announced the implementation of the HST just a few days after the BC Liberals were re-elected in May 2009. As Roger Annis notes in a Bullet article, "The government is facing a tax revolt that challenges its moral authority to govern and could eventually unseat it." More so than is the case in Ontario, left and right forces have joined together to fight the tax. B.C. NDP leader Carole James -- who fomented anti-tax sentiment in the previous election with her "Axe the Tax campaign" against the province's carbon tax -- has appeared at anti-HST rallies across the province with Vander Zalm. The campaign to bring the HST to a referendum -- which met the requirement of obtaining the signatures of 10 per cent of registered voters in all 85 provincial ridings -- is led by Vander Zalm and Chris Delaney, the former leader of the far-right B.C. Conservative Party, though the steering committee also includes political columnist and NDP supporter Bill Tieleman. Yet it is clear that the right-wing anti-taxers are in the drivers' seat. Annis notes that Tieleman serves "strictly as second fiddle."
The Victoria Times Colonist columnist Les Lyne observes:
"The Carole James-Bill Vander Zalm marriage of convenience has thrived for the past several months. James essentially ceded the opposition function to Vander Zalm -- despite any qualms she might have about him -- because he's making more progress fighting the Liberals in the streets with anti-HST campaign than the New Democrats were in the usual political arenas.
"And Vander Zalm welcomed her and her team aboard his bandwagon -- even though he despises everything they stand for -- because they represent a well-organized political machine that might come in handy.
"So far the mutual suspension of suspicions has worked beautifully. Most NDP caucus members adopted Vander Zalm as their new leader, as far as the petition drive was concerned, and dutifully went out and started collecting signatures. Vander Zalm used them and thousands of other volunteers and made the unworkable initiative process work."
The NDP-Vander Zalm alliance, however, seems to have run its course. Vander Zalm is now focused on making use of the province's recall legislation to threaten to bring down the government. It allows for the recall of MLAs and to force a by-election if 50 per cent of eligible voters sign a petition -- which takes effect 18 months after the most recent election. On June 22, it was announced that a list of 24 targeted Liberal MLAs had been drawn up. The B.C. NDP does not support the recall campaign.
Lyne argues that Vander Zalm has likely out-maneuvered the NDP:
"The New Democrats don't seem to get how much momentum they've already handed over to Vander Zalm. And how quickly it could swing against them.
"On the premise that ‘the enemy of my enemy is my friend,' they hooked up with Vander Zalm, assuming a Liberal downfall meant an NDP upswing.
"But Vander Zalm is attempting a slingshot move, working with the NDP to curb the Liberals, then breaking out the third-party option and sandbagging his former volunteer helpers.
"James must know this, but seems to have calculated that it will fail and that Vander Zalm will wind up making her premier.
"If the end result of all the drama is that the HST remains in place and the NDP takes power, then she's right.
"But if he somehow overtakes them with a third party, then she's lost a big gamble. And her job."
The NDP campaign against the HST has troubling implications. The party's legitimate criticisms of the tax reform package are overshadowed by its "tax grab" rhetoric. In this narrative, taxes are a burden to be avoided rather than a necessary and positive investment in public services. B.C.-based journalist Murray Dobbin, who signed the anti-HST petition in his own community of Powell River, expressed concern that the campaign plays into the hands of those who oppose taxation in general:
"I think that most anti-tax campaigns are put forward by people who want to see a diminished role of government. That's what worries me. I have been writing for twenty years that we need to increase taxes on high-income earners and corporations. We have been losing unbelievable amounts of revenue. When you cut taxes, you lose revenue."
And while the unions in B.C. support the anti-HST campaign, Canadian Autoworkers (CAW) president Ken Lewenza warned about the dangers of involvement in an anti-tax campaign. In a speech to the CAW council, Lewenza stated:
"I said to the Ontario NDP leader Andrea Horwath, ‘Andrea, the harmonized sales tax, as unpopular as it may be, cannot be an issue from the progressive side. It can't be an issue that makes Ontarians more cynical about taxes. We want to pay taxes. We want a civil society. We want health care. We want education. We want infrastructure. We do not want every Ontarian to think that taxes are bad.'
"...The NDP is never going to get elected on a revolt on taxes. Never. The only ones who are going to benefit as a result of this fightback will be the Tories."
Annis stresses that "[t]he campaign against the HST should not be the exclusive reserve of populist demagogues." Unions and other left forces must shift the focus of the campaign toward "eas[ing] the tax burden on working people" and pushing for tax increases on corporations and the wealthy in order to pay for social programs.
In spite of devoting months to fighting the ‘regressive' HST, however, the NDP has failed to put progressive taxation on the agenda. Former federal leader Ed Broadbent's call for increasing income taxes on those earning more than $250,000 per year to eliminate child poverty in Canada, for instance, fell on deaf ears. However, the NDP's focus on the increased taxes to be paid for by "average middle-income families" is highly problematic, as is much of the Canadian left's general aversion to consumption taxes.
Taxation and left agendas
In an editorial written in the Toronto Star, progressive economist Hugh Mackenzie criticized the Canadian left's tendency to "[campaign] for better public services as if they can be provided free." It is assumed that the improvement of public services can entirely be paid for by taxing corporations and the wealthy, while middle-income taxpayers, "working families", and small business can continue to pay the same levels of taxation or even receive tax relief. Mackenzie points out that: "Nations that have the most highly developed systems of public services pay for them with all kinds of taxes, including sales taxes and payroll taxes that everyone contributes to because everyone knows there is no such thing as a free lunch." This is indeed a key lesson of European social democracy.
There is little (if any) correlation, then, between the degree of tax progressivity on the one hand and the extensiveness of social welfare measures or levels of inequality on the other. There is, however, a positive correlation between levels of direct spending and equality. It is for this reason, that it is important to recognize not only the redistributive function of taxation, but also its role in financing welfare states and providing benefits that fall to low-income and dependent workers. To a substantial degree, this has been done via so-called "regressive taxation." The size of the public sector, too, is strongly correlated with levels of equality -- that is, while the existence of a large public sector does not guarantee higher levels of equality, it is a necessary component in the pursuit of egalitarian welfare state measures.
The limitation of relying primarily on income taxes was recognized by public finance scholars and policymakers (from across the spectrum of the left, including Marxists) in the post-World War II period. Indirect consumption taxes could serve as an administratively simple and efficient means of raising revenue, which was necessary for greatly increased spending in such areas as health, education, welfare and others with distributional objectives. Tax progressivity alone could not address such distributional concerns; high income taxes on the wealthy alone were insufficient in terms of raising revenue. Substantial revenue thus had to come from taxation of wage and salary earners. Given the administrative difficulties in reforming the income tax, it made much more sense to turn to broad-based, indirect consumption taxes to finance government redistributive programs. Revenue raised from consumption taxes does not fluctuate during economic downturns nearly as much as income taxes, and thus serve as an important revenue-raising tool.
While a broad-based indirect tax was an effective means of raising revenue to finance redistributive programs, it was also recognized that sales or consumption taxes alone do not contribute to equality, as lower-income households would be harmed by such taxes. Thus redistribution had to be met by other means: partly through personal direct taxation, but in the case of the most needy, mainly by enhanced transfers.
The case of Sweden is illustrative. Sweden, along with Norway and Denmark, has the world's highest VAT (value added tax) at 25 per cent. This approach of broad-based taxation with few exemptions has contributed to a very high tax intake. The Swedish left and the main trade union organization, the Landsorganisationen (LO), have long supported consumption taxes as a means of financing social expenditures.
Canadian Labour Congress (CLC) chief economist Andrew Jackson provides a useful comparison of taxation levels in Canada, the U.S., Denmark and Sweden. In 2004, tax revenues represented 33.6 per cent of GDP in Canada, higher than the U.S. (25.6 per cent), but significantly lower than Denmark (48.1 per cent) and Sweden (50.1 per cent). Social expenditures represented a much higher percentage of GDP in Sweden (31.3 per cent) and Denmark (27.6 per cent) than is the case in Canada (17.3 per cent) and the U.S. (16.2 per cent). In terms of tax mix, both Denmark and Sweden rely much more heavily on goods and services taxes, at 14.0 per cent and 13.0 per cent of GDP, respectively, than did Canada (8.7 per cent) and especially the U.S. (4.7 per cent). Sweden depends much more on social security and payroll taxes (16.7 per cent), while they are barely a factor in Denmark (1.4 per cent). Personal income taxes represented a much higher percentage of GDP in Sweden (15.8 per cent) than in Canada (11.7 per cent) and the U.S. (8.9 per cent), but a lower percentage of overall taxation (31.3 per cent, 35.1 per cent and 34.7 per cent, respectively). Denmark stands out for its reliance on personal income taxation -- representing 24.7 per cent of GDP and 50.7 per cent of total taxation.
Ironically, the U.S. and Canada in fact have more progressive tax systems than Denmark and Sweden. Taxation rates are higher in the Scandinavian countries at all income levels. Thus the highest earners pay a higher level of income tax, but so does the working class -- the ratio between the top bracket and what an average worker pays is smaller in Scandinavia. In 2004, the combined level of personal income taxation and social security contributions for an average production worker was 24.1 per cent in the U.S. and 25.1 per cent in Canada -- compared to 33.7 per cent in Sweden. And the average production worker in Denmark (44.1 per cent), along with Germany (44.5 per cent), paid the highest among OECD countries.
All countries use taxes and transfers to counter inequality, but the Nordic social democracies mainly rely on transfers. Transfers as well as taxation, have a role to play in terms of reducing inequality. In a paper for the Ontario Fair Tax Commission -- which was established by the Ontario NDP government as a means of exploring tax reform -- Lars Osberg stressed that transfers must also be taken into account when one speaks of progressivity:
"In practice, the tax and transfer systems are inevitably closely linked -- indeed, it can be argued that transfer payments are ‘negative taxes.' The net impact of taxes and transfers on individuals is the difference between payments made to and payments received from government. This net impact is relevant for equity purposes. Although some tax choices (such as a value-added tax) may be regressive, taking a higher percentage of the income of the relatively poor, the tax/transfer system as a whole may be progressive, if expenditures benefit primarily the less affluent (as in Sweden)."
It should be stressed that progressive taxation must remain on the agenda for the left, and that the shift away from progressive taxation (including in Scandinavia) over the past two decades remains a concern. In Canada, the case for far more progressive taxation remains especially compelling. Jackson points out that the income gains of the 1990s went disproportionately to the wealthiest 10 per cent of Canadian families -- and these income gains were more pronounced the further up the income ladder. And while the effective income tax rate for most Canadian taxpayers declined only slightly, it declined much more sharply for the very wealthy. The phenomenon of rising incomes at the top, Jackson observes, can only be effectively countered by progressive taxation:
"Canada needs to pay much more attention to income tax progressivity given the steep increase in top incomes, which is now the key driving force of rising income inequality in Canada and other ‘neoliberal' advanced capitalist countries. Transfers counter inequality by raising the lower end of the income distribution, compared to the middle and the top, while progressive income taxes counter inequality mainly between the top and the middle and the bottom of the distribution. If inequality is now being largely driven by the growth of the income share of the very top, progressive income taxes must play a larger role in our redistributive policy arsenal."
In spite of the NDP's denunciation of the "regressive" HST for taxing "ordinary Canadians" rather than corporations and the wealthy, it has failed to put progressive taxation back on the agenda. Besides symbolic gestures opposing the latest round of tax cuts by Liberal and Conservative governments, the NDP has been unwilling to call for increased income taxes for those with the highest incomes. By failing to do so, claims that the party is not "anti-tax" just "anti-regressive tax" ring hollow. The declining progressivity of the Canadian tax system remains a core concern, and an issue that certainly should be taken up by the NDP. However, the key lesson of Nordic social democracy -- that a well-financed welfare state necessitates the use of consumption taxes and other so-called "regressive" taxes -- remains essential.
There in fact is a compelling case for consumption taxes on socialist and ecological grounds. Social democrats, include those in Scandinavia, have been rightly criticized for pursuing "shared austerity" policies that redistribute income within the working class/middle class while having abandoned policies that target capital. That being said, socialists ought to defend policies that redistribute income from higher-income workers to low-income and unwaged workers on solidaristic grounds. As the Nordic social democracies have shown, this is done through sales and turnover taxes. There is also a "public goods" argument. The taxation of private consumption can fund the provision of public goods (such as parks, public transit, public housing, etc.) that are more ecological than private goods. Furthermore, public goods provision has the effect of decommodification which is as important as progressive taxation in terms of moving toward socialist relations in capitalist societies.
The global economic crisis has resulted in a hard-neoliberal turn toward fiscal austerity and public sector wage restraint and cutbacks. Such an anti-austerity campaign necessitates at the minimum reversal of the Harper government's cutting of the GST from 7 per cent to 5 per cent, a move that was opposed by the NDP but goes against the spirit of the anti-HST campaign. As Mel Hurtig observes, Canada already ranked number 27 out of 30 OECD countries in terms of taxation of goods and services in 2003. While "someone buying expensive jewellery or new Bentley will save a bundle... a 1 or 2 per cent saving on even inexpensive household items represents only pennies. Yes, pennies to a poor person are important, but 2 per cent of the cost of a million-dollar house could pay for a big pile of groceries for many poor families."
The GST cut costs the national treasury billions of dollars per year. The restoration of the GST to 7 per cent alone would significantly offset the cuts to the public sector. Further increases to the tax are essential components to the improvement and expansion of public services. Transfers to low-income households could be significantly increased as well.
Remarkably, one-third of Canadian families with incomes over $100,000 received a GST credit in 2003, while low-income families represented one quarter of those receiving the GST credit. Hurtig correctly asks: "How's that for great public policy?" It is clear that the GST credit ought to be more targeted toward those with the lowest incomes.
The building of an anti-austerity campaign that makes the case in support of expanded public services is not likely to come from the NDP leadership, given its opportunistic stoking of anti-tax politics on behalf of so-called "working families," as well as its muted opposition to current attacks on public sector unions. It is a matter of some urgency to re-imagine what a new anti-neoliberal alliance will look like in Canada. The union movement in Canada is, for the most part, providing almost as little leadership in social struggles.
Public sector unions in alliance with users of public services ought to take up the leadership here, but they will only be pushed to do so to the extent a new left begins to emerge inside the wider union movement. But it could be argued that private sector unions and social movements -- anti-poverty, feminist, environmental, and other organizations -- are in an even worse state of disorganization. This speaks -- like the debate over the HST as a whole -- to the wider crisis of the left in Canada. An anti-austerity campaign needs to be equal parts a fight against neoliberalism and building a new left.
Matt Fodor is a Ph.D. candidate in political science at York University. This article first appeared in the Social Project's e-bulletin The Bullet.
if only the conservatives themselves were as keen about the maintenance of spotless lines of ideological demarcation between the different political parties as the author of this piece is. the conservative think-tank the fraser institute has published several pieces in various newspapers in BC and ontario very much in support of the HST. why? because they are far more aware than this author is of the real purpose behind the shift:
'Harmonization will not only reduce prices, but also the costs of business investment. Since the PST applies to business inputs, including much of the machinery, equipment, and technology (computers and software) firms purchase, it discourages business investment. By eliminating the PST on inputs, the HST will spark more business investment and development. ... To recoup the lost revenue from refunding the tax paid on business inputs, the HST will apply to a wider array of goods and services than the PST.' national post 22 june 2010.
i.e., businesses pay less, wage-earners pay more. it's really not that complicated. you might even call it an 'austerity measure'. this is all done with the usual ostensible purpose of 'attracting investment' from overseas corporations which will of course bring jobs, growth, prosperity, bliss and happiness for all, just like history has consistently demonstrated they always don't. it's amusing to see someone avocating the abondonment of an anti-austerity struggle in the name of countering austerity. it echos his denunciation of the NDP's display of political 'rhetoric' in combating an actual corporate attack on the welfare of working people while simultaneously excoriating them for not toeing the abstract leftist party-line - 'taxes can be good' - enough!
it would indeed be wonderful if canada were in the midst of a social democratic renaissance and had progressive leaders who were implementing the complete overhaul of social services our country desparately needs in which case the implementation of a strong progressive tax structure would be of great benefit - perhaps even one, such as thomas paine recommended over 200 years ago, designed to eventually reach such a prohibitive level as to stamp out the reproduction of the artistocratic class.
but this is not what we face in the second decade of the 21st century.
what we really need in order to distance ourselves from the 'right' is to abjure static ideological principles; to think 'dialectically' if i may be so bold. it is the continual ceding to its enemies the privilege of determining the outer contours of its world of discourse that might have something to do with the left's lack of leadership and organization here mentioned [and then partially pinned on the very labour leaders whom had just been cited to buttress the author's whole argument!]. this article is a case in point: in the drive purge from the ndp any hint of ideological impurity - in the endless subjective quest to be more 'radical' no doubt - the author has in actuality backed himself into a corner, suddenly sharing the esteemed company of the fraser and c.d. howe institutes. [perhaps they will read this article and mine it for ideas on how to sell their policies to their opponents!] les extremes se touchent.
taxes have more often than not been a brutal tool of extortion and repression of working people, a portion of their wages going directly into those very tools of oppession. the right has cannily coopted what used to be a populist cry of the left's. l'exemple par excellence, this ain't george bush talking:
'No more taxes!!! From today, therefore, taxes are abolished! It is high treason to pay taxes. Refusal to pay taxes is the primary duty of the citizen!'
- karl marx 1848.
In British Columbia, the implementation of the H.S.T. means a $2 billion per year tax cut for corporations and a $2 billion per year increase for the rest of us. Regular people pay more so corporations can pay less.
Shouldn't all progressives be opposed to that??
The author of this piece is from Ontario. He discusses the debate in B.C. from afar.
I don't know anything about the H.S.T. debate in Ontario, but here in B.C. people on the left are not -for the most part - criticising the H.S.T. because consumption taxes are regressive. I've hardly ever heard that argument.
Rather, people from all walks of life are opposed to this policy because the Campbell Liberals lied in the last election about it. There is a widespread view that the government was elected on false pretences.
And many are fed up with a failed economic policy which relies almost exclusively on continually reducing costs for business. The H.S.T. is only the latest example.
It's very significant that 700,000 British Columbians signed the initiative petition. More than 10% of electors in every riding in the province had to sign the petition before it could be declared valid. That threshold was met. Anyone who cares about democracy needs to listen carefully to that kind of message from citizens. People here are overwhelmingly opposed to this policy.
I'd like to see Fodor's data supporting the proposition that the progressive taxation well has run dry and we now have to go after the income of the working class in a big way through consumption taxes.
I have trouble believing that in a country where the richest 10% of families own 58% of the wealth, while the poorest 50% own a mere 3.2% (2005 figures; probably even more extreme today) we have to resort to regressive forms of taxation to "finance government redistributive programs'.
I also note the logical contradiction of talking about "(income) redistributive programs" being funded disproportionately by the people to whom the redistribution of wealth is supposed to be going, rather than by the rich whose wealth is supposed to be redistributed!
As for the "administrative difficulties" of reforming income tax, how hard is it to raise the rates?
In British Columbia, the implementation of the H.S.T. means a $2 billion per year tax cut for corporations and a $2 billion per year increase for the rest of us. Regular people pay more so corporations can pay less.
Shouldn't all progressives be opposed to that??
....
I don't know anything about the H.S.T. debate in Ontario, but here in B.C. people on the left are not -for the most part - criticising the H.S.T. because consumption taxes are regressive. I've hardly ever heard that argument.
Actually, Blair, making regular people pay more so corporations (and the rich generally) can pay less is practically the definition of regressive taxation. Thus your own criticism of the HST is, in effect, an argument that the tax is regressive. And rightly so!
Frankly, I don't care as much that the B.C. government lied in the last election - that's expected of them. If they had told the truth about the HST would it make the tax any more acceptable?
I completely agree. Of course, the H.S.T. is completely regressive. But that's because of the "input tax credit" which is provided to corporations and cuts their sales tax by billions while we all pay more.
The point I was trying to make was in response to Matt Fodor's contention in the article that "....much of the Canadian left has been supportive of the anti-H.S.T. campaign on the grounds that consumption taxes are regressive...." I have not heard any general argument from the left in B.C. that all consumption taxes are regressive.
Rather than any critique of consumption taxes in general, there has been a specific criticism of the H.S.T. The whole economic rationale for the H.S.T. is that taxes for business need to be cut.
Heatjane excoriates the author of the above article for indulging in "leftist abstraction," then quotes none other than Karl Marx, completely out of context, to give us a new aphorism: 'No more taxes!!! From today, therefore, taxes are abolished! It is high treason to pay taxes. Refusal to pay taxes is the primary duty of the citizen!'
What is overlooked in this quote of course is that Marx was writing in the context of the 1848 revolutions in Germany, when the aristocracy and military refused to allow a newly elected parliament to assemble. It was in rejection of this overthrown regime's attempt to continue ruling without legitimacy that Marx issued his decree. In other words, no taxation from an ILLEGITIMATE government. Now how does this apply to the HST issue in Canada? And who is guilty of the worst, most undialectical, ideological abstraction?Blair:
Consumption taxes like the GST/HST and other sales taxes are regressive because they tax everyone, rich and poor, at the same rate; as a result the poor person buying a TV set spends a higher percentage of her income and wealth on the HST than a rich person buying the identical TV set does. Giving special rebates and grants to poor people to offset the tax burden does not solve this problem, first, because the rebates and grants are usually geared to income as reported on tax returns and many poor people don't file tax returns, and second, because people in the middle between the rich and the poor also spend a higher percentage of their income on consumption taxes than the rich do, but there is no relief for them.
This regressiveness is inherent in any system of taxation where people are made to pay a tax that bears no relation to their ability to pay (i.e., their income or wealth). The HST would be a regressive tax even without the "input tax credit" for corporations. The latter only compounds the regressive nature of the tax.
Unlike consumption taxes, income taxes (or wealth taxes) are considered "progressive" to the extent that they make the richer pay a higher percentage of their income (or wealth, as the case may be) than the poorer, according to a sliding scale of tax rates. This is based on the idea that the more income you have, the greater proportion of it you can afford to pay. It has the effect of a partial redistribution of income - very "partial" in fact, because in spite of the income tax the rich still manage to get richer and the poor get poorer!
The advocates of a "flat tax" system for income tax want to remove this progressive aspect from the existing system.
That in a nutshell is the difference between progressive and regressive forms of taxation.
jiffy-squid wrote:
'Heatjane excoriates the author of the above article for indulging in "leftist abstraction," then quotes none other than Karl Marx, completely out of context, to give us a new aphorism: 'No more taxes!!! From today, therefore, taxes are abolished! It is high treason to pay taxes. Refusal to pay taxes is the primary duty of the citizen!'
'What is overlooked in this quote of course is that Marx was writing in the context of the 1848 revolutions in Germany, when the aristocracy and military refused to allow a newly elected parliament to assemble. It was in rejection of this overthrown regime's attempt to continue ruling without legitimacy that Marx issued his decree. In other words, no taxation from an ILLEGITIMATE government. Now how does this apply to the HST issue in Canada? And who is guilty of the worst, most undialectical, ideological abstraction?'
??? how is the quote out of context? the only point being made was very simple: 'radical leftists are not always pro-tax' and the quote serves it admirably. it is not an abstract but an actual instance of a famous radical leftist being anti-tax. the historical background neither adds to nor subtracts from this bare assertion. BUT, indeed, the historical milieu actually invites even MORE parallels, since, in BC, the tax revolt was in part waged with the threat of recall:
'It looks like the only way to force Campbell and Finance Minister Colin Hansen to drop the HST is to threaten their legislative majority and, if necessary, recall enough B.C. Liberal MLAs that they cannot remain in government.
'The appropriate response to abuses of power is to remove that power. Taking out just eight B.C. Liberals would defeat the government.'
- the tyee, 10 august.
i.e., 'no taxation from an ILLEGITIMATE government,' illegitmate because it broke its election promise and, on the hst issue, lacks the support of 85% of the electorate.
it is of course true that the very opposite point - 'radical leftists are not always anti-tax' - can be equally demonsrated by a quote from the same source [same year even!]:
'a heavy progressive or graduated income tax ... will be pretty generally applicable'. - karl marx, 1848.
the context in this case would be a proletarian dictatorship: n/a. the point is, radical leftists should avoid political dogmatism, be dialectical, and not just say 'white' when the right says 'black', such as is being advocated in this article.
[p.s. the words 'dialectical' and 'abstraction' are as rampantly abused by the left in proportion to the utter importance of their being fully grasped. but that's for another message board.]
Um, no, heatjane, you provided no context for your quote from Marx, which on its own looks like flat out opposition to taxes in general. But now you have provided the relevant context, so thank you. However it is a bit of a stretch to equate the illegitimacy of a government overthrown by revolution (Marx's context), and one that simply broke an election promise (the Campbell Liberals). By that standard all governments are illegitimate and have no right to tax the people. But I guess I don't understand dialectics very well.
And are we reading the same article? What I took from it is a warning to the left that dovetailing onto the right-wing anti-tax agenda can have repercussions. Not a black and white opposition to the anti-HST movement, just pointing out the difference between "tax shift" and "tax grab" rhetoric. The left has to be very clear in articulating what it is against here and what it represents as an alternative. Your "dogmatic leftist" is a straw man. And that ain't dialectics.
The article is clearly pro-HST and against the anti-HST movement.
The author says we need consumption taxes in order to have a welfare state, and argues in favour of increasing the GST to 7%.
Funny, the author doesn't seem to worry about being seen as allying with the C.D. Howe Institute and the Fraser Institute in supporting the HST! And yet the anti-HST leftists are supposed to be embarrassed by being on the same side as Bill Vander Zalm....
"The article is clearly pro-HST and against the anti-HST movement."
No. The article slams the HST as regressive because it lets business off the hook and thereby shifts the tax burden even more onto individual consumers. What the author advocates instead (see the last paragraphs) is a combination of progressive income taxation, augmented by a consumption tax like the GST, and redistribution of tax wealth by re-invigorating public services. The issue he takes with the anti-HST movement on the left (particularly the NDP) is its failure to put any of this on the agenda, but to simply parrot the "tax grab" rhetoric of the right, which has very different values and goals.
Moreover, you accuse the author of being both pro-HST and pro- 7% GST, which misses the entire point of the article, and is even a contradiction.
[T]he NDP's focus on the increased taxes to be paid for by "average middle-income families" is highly problematic, as is much of the Canadian left's general aversion to consumption taxes....
[Economist Hugh] Mackenzie points out that: "Nations that have the most highly developed systems of public services pay for them with all kinds of taxes, including sales taxes and payroll taxes that everyone contributes to because everyone knows there is no such thing as a free lunch." This is indeed a key lesson of European social democracy.
There is little (if any) correlation, then, between the degree of tax progressivity on the one hand and the extensiveness of social welfare measures or levels of inequality on the other. There is, however, a positive correlation between levels of direct spending and equality. It is for this reason, that it is important to recognize not only the redistributive function of taxation, but also its role in financing welfare states and providing benefits that fall to low-income and dependent workers. To a substantial degree, this has been done via so-called "regressive taxation."...
Given the administrative difficulties in reforming the income tax, it made much more sense to turn to broad-based, indirect consumption taxes to finance government redistributive programs....
However, the key lesson of Nordic social democracy -- that a well-financed welfare state necessitates the use of consumption taxes and other so-called "regressive" taxes -- remains essential.
There in fact is a compelling case for consumption taxes on socialist and ecological grounds....
The global economic crisis has resulted in a hard-neoliberal turn toward fiscal austerity and public sector wage restraint and cutbacks. Such an anti-austerity campaign necessitates at the minimum reversal of the Harper government's cutting of the GST from 7 per cent to 5 per cent...
The GST cut costs the national treasury billions of dollars per year. The restoration of the GST to 7 per cent alone would significantly offset the cuts to the public sector. Further increases to the tax are essential components to the improvement and expansion of public services....
How can anyone read this and not notice that Fodor supports the HST/GST and the increase of the GST to 7% and even higher?
And no, it's not beside the point of the article. It is integral to Fodor's argument that the HST (and consumption taxes in general) is something the NDP should support, not oppose. Social democratic reform "necessitates the use of consumption taxes" he says.
Huh??? I said that Fodor advocates a "progressive income tax, AUGMENTED BY A CONSUMPTION TAX LIKE THE GST, and redistribution of tax wealth by re-invigorating public services." I've hardly failed to see that he supports a consumption tax.
But lumping the HST and GST together, as you did here again, erases the important difference between the two. However regressive the GST is, the HST is even more so because it shifts the burden away from businesses and more onto the indivudual. Fodor goes on to make a good case for the use of consumption taxes in general, which you may or may not agree with. But ignoring the difference between GST and HST, or the rhetoric of "tax grab" versus "tax shift," ignores a very key narrative that the left should be making a foremost issue of: the increasing burden that's being shifted onto ordinary people while cutting the tax burden on business. Even worse, it plays directly into the conservative narrative of anti-tax sentiment that has been fostered among lower and middle class Canadians. This is the left digging its own grave!
There is room for nuance here, is there not? As long as the "left" acts confused about what really matters in key issues like this, jumping on the bandwagon with whatever enemy's enemy happens to come along, it will continue down the path of failure that it's been on for far too long.
There is no difference between the GST and the HST. Both are consumption taxes; both are sales taxes; both shift the tax burden onto individuals and away from businesses.
The whole point of the Harmonized Sales Tax is to make provincial sales taxes exactly like the GST so that the provincial sales taxes and the GST can be "Harmonized" and merged into a single tax exactly like the GST!
The left doesn't need to jump on any right-wing bandwagon to oppose regressive taxes. There are perfectly good reasons for leftists to oppose them in principle. If Fodor had written an article excoriating the NDP for not advancing leftist principles in the anti-HST campaign, that would have been a useful service. But he had to go and take a two-pronged attack ("misguided for two main reasons...") and include as his second prong a lecture to the left on how consumption taxes are both necessary and desirable. Indeed, that became the overriding theme of the article. Unfortunately, he's wrong. And advancing that wrong thesis only undercuts the strength of his otherwise valid criticism of the NDP for echoing the arguments of the right wing anti-taxers.
And especially not if your unionized workers vote Liberal. Because misleading workers to believe that Liberals would spend on health care, zero tutition fees policies for education, a national daycare program and and close the gap on a $100 million dollar infrastructure deficit in Ontario would be wrong and all.
I have no problem imagining that Canada's federal social democrats would invest in social programs and infrastructure, like Nordic country social democrats have. But not Canada's Liberal Party. Canada's Liberals actually started us down the path of neoliberalization by 1975. We on the left like to blame Mulroney for privatizing money creation by 1991, but the Liberals under Trudeau began with borrowing from private banks at high interest and finished selling off the country and environment with NAFTA by 1994.
Like the article says, HST plus corporate tax cuts is part of the neoliberal agenda and has nothing to do with the Nordic model. If the Liberals want to cut corporate taxes and raise them for the working class, then the NDP can disagree with this seedy tax shift maneuver, and they can disagree with it in principle at the same time. Personally I am not under the illusion that the Liberals are indicating that they want to create Nordic style social democracy in Canada. Fat chance, and so I say no to Liberal government consumption taxes. Let them take the heat for it, because they have no intentions of creating a competitive Nordic style social democracy, no way.
If working class and middle classies want to think of it a tax grab, then that's fine with me. We don't need a redundant second conservative party anyway. They won't be fooling me anytime soon.
Back when Howard Hampton was leader, the Ontario NDP tried campaigning on the idea of raising taxes on the wealthy as a means of funding public programs, even having a website entitled "publicpower.ca". This flopped with the public. As far as the comparison with the right's (Hudak -- admittedly I'm not too familiar with BC) campaign against the hst, the fact is the population isn't expressly told by the right what their underlying rationale is for opposing it. The right, so far as the basic public message, do not have to justify their opposition to it. So, levying the criticism that the left (ndp) has to explain their rationale for opposing it and answer the secondary question of where funding for social programs comes from simply serves to cripple the message from the left. This would just serve to obscure the basic message that the ndp feels the hst is bad public policy. If the hst was being used to fund social programs, then this might be an important consideration. But since it's just a tax transfer (basically a tax increase for working people) then why not reflect the negative feelings toward it? Why complicate the message?
That makes no sense at all, mark alfred. If neither the left nor the right bothers to explain why they oppose a consumption tax increase, the public are quite justified in assuming they have no differences on tax policy. The NDP never got anywhere by encouraging the public to think they were just like the other parties.
Besides, a smart political party will use current issues to educate the public about their political point of view and win people over to it. It's folly to pass up an opportuity to do so when you already have the attention of an electorate that's concerned about an issue such as the HST.