Friday, July 02, 2010

Harmonized Shaft Tax

I suspect consumers will be waiting a long time for the "trickle down". Proponents make some interesting arguments in favor of the HST, but in the end there seems a disconnect from theory to reality.

The fact the HST, in Ontario anyways, targets the basics, such as electricity, heating and fuel, tells me it's a fools hope to think an improved business climate will lead to lower prices. Fact is, everybody will pay it on the chin for the most elemental needs, and hope some other, mostly tertiary items, are cheaper as a result of lowered costs. You do the math, it's hard to see how it's revenue neutral, in fact it resembles a scenario wherein corporate taxes are lowered, while personal taxes are raised. Maybe the bottom line for the government might be revenue neutral (say proponents), but the BURDEN has changed once again.

I received my first "hush money" from the Ontario government, the fact it was sent part proof positive that it will impact me adversely. On top of this one year "transition" payoff, we hear that personal income taxes will be lowered in the future, if it turns out consumers have been negatively affected. Curious, to make these assertions, when you are trying to argue the opposite now, there will be no adverse affect.

I note that fiscal conservatives and business are the HST's biggest fans. Generally, these people hate any new tax, because that burden will leave less disposable income, acting as an ultimate drag on the economy. And yet, here we are, people arguing the classic trickle down economics nonsense that has already shown itself a failure. Taxing new homes, home renovations, what a terrific way to stimulate growth? The raw materials don't suddenly get cheaper, the cost of gas isn't lower, so where oh where will we find these terrific savings based on competitive capitalism? If history is our guide, about all we will see is more money divvied up amongst the executive class. Oh maybe a few crumbs will fall from their mouths, but human self interest tells us the fat cats will retain as well.

This HST isn't a wash for the consumer, it's a shaft. It's disguised corporate welfare that we all have to pay for. The argument that it will increase jobs is superficial, because if my disposable income is affected, I'm paying more for CORE costs, I'm buying less goods and services, which contradicts the supposed benefit. This is a case where theory never translates to the practical, and unfortunately we all pay for the error.

Anyways, between the higher electricity costs and higher internet fees, I best logoff right now, because this post is killing my bottom line!


MLM said...

They have already made a cut to personal income taxes, starting on Jan 1, 2010. They may cut them MORE in the future, but the cut already in place for the past 6 months helps to even the burden out.

Steve V said...

If this tax is so revenue neutral, why am I receiving cheques and being promised future personal income tax reductions? Common sense, there is nothing revenue neutral about it.

Steve V said...

I'd add, that cut this year was on the lowest tax bracket.

Dan F said...

Its a mini green-shift. The idea of taxing what we burn instead of what we earn was inherently a good one, we just had a bad salesman in the last election. This is a small step in that direction, and I view it as a really good thing

Steve V said...

No offence, but when you are taxing renovations, which inherently improve the environment,and comparing it to the green shift, its an insult. Is my wind power electricity being taxed? You bet it is, there is zero distinction. Bad, bad analogy.

Jerry Prager said...

I'm on the lowest tax bracket and I owe money.

gingercat said...

As one of those pesky fiscal conservatives, all I can say is that over the long term this should be beneficial to me. It should increases my chances of maintaining or bettering my employment by encouraging business to stay or at least locate to Ontario.

As a fiscal conservative I also prefer consumption taxes to income and like it or not the HST is a consumption tax.

But the one thing that I agree with, is that over the short term we are indeed getting shafted. As a consumer I see no benefit, only costs increasing. It will take years for my purchasing power to increase, considering we are still in a jobless recovery after the recession. The short term is definitely going to be painful for us all.

DL said...

The unfortunate thing about the HST is that it is the worst of both worlds - it is creating a massive public backlash (esp. in BC) and "tax rage", BUT it doesn't even provide the consolation prize of increasing revenues for the provincial governments! I for one think that in the long run we all have to pay more tax to have the kind of society we want with good health care a social services. I might have actually favoured the HST if it was about INCREASING government revenues in order to pay for the things I support, but no, no, no Its REVENUE NEUTRAL - every extra penny I pay in HST is matched by tax cuts to private industry. So we get a lot of populist tax rage - and we don't even get any extra government revenue out of it. Its bad, bad, bad...

The Mound of Sound said...

Steve here on the Left Coast the HST is political arsenic for the LINO Campbell Libs. I took time to notice who was showing up to sign the anti-HST petition and the great majority of them were traditional Campbell supporters - the elderly. My own BCLib MLA told me he knows full well that it's his supporters who are turning on his party.

We're talking about this tax quite a bit and there's an emerging consensus that it's illegitimate. Once the public gets to that perch the next step is a black market, under the table, cash/barter economy. A lot, if not most, of the trades I've met out here have no qualms whatsoever of working off the books for cash. It's really not all that hard to recoup most, if not all, of the government's tax grab at the cash register. Not hard at all.

Steve V said...


No hard to understand the differing levels of outrage between the two provinces. Campbell just one an election, then immediately introduced this tax, which was the height of deceit and arrogance.

marie said...

I think we need to look at the Bc governments web site and get a few facts instead of a bunch of opinios without any research.

I personally am for eliminating the PST with the HST. You will also find that the rebate is meant for lower income citizens in BC.

The HST would apply to the same goods and services as the GST with some important exceptions (gasoline, home energy use, books, children's-sized clothing and footwear, children's car seats and car booster seats, diapers and feminine hygiene products).
All existing GST exemptions will continue to apply (i.e.; basic groceries).
The Social Services Tax is eliminated reducing tax from 15% to 12% on liquor served on site at restaurants and pubs.
Effective January 1, 2010, all taxpayers will see the basic personal income tax credit increase to $11,000 from $9,373, an increase of 17%, to help consumers make the transition to the new Harmonized Sales Tax.

All this info on the BC Liberals web site.

This looks a lot more credible then the chatter on the new HST

Have a great weekend all.


Jerry Prager said...

I thought HST stood for Harper sales Tax, seems more like a heating seeking missile aimed at two liberal provincial; governments.

The Mound of Sound said...

Marie, given the deceit of the Campbell LINO government to date you're a lot more trusting, perhaps gullible, than others. From BC Ferries to BC Rail to BC Hydro and now to the HST, this is one of the most dishonest pack of reprobates this province has ever seen. Even their claims of how much extra would be paid by the average family were shown to be off by fully two-thirds using Statistic Canada's tax models. They're a pack of damned liars Marie. Thankfully most BC'ers know it.

weeble said...

Hard to buy into the revenue-neutral concept. Here in BC we have not received any special payment to help us adjust. In fact, with respect to the increased surcharges, the environmental levy we were supposed to receive payments periodically...seen one, they have quietly been absorbed into the public coffers.
An increased personal exemption help all of the wrong people. If you have no money, waiting until the end of the year to receive your tax refund ain't going to put food on your table today.
The best solution is, and always will be, eliminate the GST on things like food. It is the poor which are hurt the most by this.
Oh yeah, gas prices went up by .02 in BC as the result of the environmental levy...coincidentally on July 1st....still looking in the mailbox for my cheque to offset that.
The thing is...most people would pay higher taxes on things like gas or booze if it meant less taxes for the poor or free healthcare.

Steve V said...

When I'm figuring out what's what, about the last source I'd rely on is what the government is telling me.

marie said...

mound of sound;Even their claims of how much extra would be paid by the average family were shown to be off by fully two-thirds using Statistic Canada's tax models. They're a pack of damned liars Marie. Thankfully most BC'ers know it.

Most long time Bc'ers which I am one of know darn well that any other party is not stepping up and saying they will rid this tax if elected.

Maybe you don't like Campbell and BTW he is not my favorite person either but when he took leadership from the NDP's we were literaly broke. Big business were getting out of BC. The only people who liked them were the NDP union workers which my husband was one of them but didn't play their tune. When the workers are approached and told to vote for them, that did it for him.

Houses were not selling, people were moving away and that all changed with a change of government.

Say what you will and I don't like taxes as much as the next guy but lets be relistic here and take the time to study it before making up your mind on this tax because someone else like the NDP said it was bad. Ask them point blank on what they would do if elected. Bc'ers are not that gullible with the nDp's brand of politics.

Blame the right party like the Reformatories who promoted it all along. All the other parties are all a bunch of liars and that's a fact.

marie said...

How about BC being stuck with the fast Cat ferry fleet that was sold for peanuts agains the cost of building them and wasn't feasable for the Island run.

Oh and its not only the Liberals that are a bunch of liars. Do a little research and you will find the boners the NDp'ers did while in office for 10 years. IMO, they are all a bunch of liars with no exceptions.

As for the Cons, even their
first vice-president of the conservative party stepped down. Check Micha Popoff's web site for his letter of resignation. It is really an eye opener.

Happy reading friends. It's all there on the tyee

Fred from BC said...

From BC Ferries to BC Rail to BC Hydro and now to the HST, this is one of the most dishonest pack of reprobates this province has ever seen.

Don't forget the stuff that is merely useless (but puts money into the hands of the government or their close friends, or buys them votes from special interest groups), like the carbon Tax, those ridiculous little run-of-river power plants that are actually *less* 'green' than a large hydro project (and privately owned, and more expensive to the taxpayers), 'Grant's Law' that forced everyone to prepay for their gasoline but somehow dropped the other requirement for at least two employees on a night shift, renaming the Queen Charlotte Islands, creating the 'Great Bear Rainforest', new toll bridges everywhere, new restrictions on smoking, etc, etc...

(there's more, but that's all I can think of offhand)

Greg said...

It is no coincidence either, that same people who like the HST are the ones generally happy with the direction of the G20 countries -- lower corporate taxes and "austerity" (cuts to government services).

JimmE said...

I guess I am in the minority.
I'm a left of centre sophomoric partisan LIBERAL AND a small business owner. So for me, the HST is a great idea.
From my POV I got out of the buying & selling stuff business, and scaled back to selling services years ago because of the stupidity of the PST.
For example: Two identical items, sold to the same client, on the same order; one PST was charged, the other we pay the PST & do not charge the client. How the frig does one do that when the item comes from the same production run? Answer, hours of non billable time & educated guess work. We are now working again with two manufactures to develop THINGS not just SERVICES; will I hire more people? - Maybe. Will my suppliers? - Maybe not. Point is in a very small way directly as a result of the HST my company will be increasing our activity - good for everybody.
I can't speak to the BC example, but in Ontario, between the recession, & making up for the Harris years, there was no way to make this truly revenue neutral.
Sorry to all, but I think the HST is great, notwithstanding the fact that the oil companies decided to coincidentally use the same day to raise the price of gas - really, it was just a coincidence.

Tof KW said...

Sorry you feel this way about the HST Steve; because frankly I think the Liberals were wise to (eventually) realize that as hated as the original GST was - it was far better than the old Manufacturers Sales Tax it replaced. Also the GST was to be merged with provincial sales taxes by design, so Ontario and BC are just late in converting to an HST. I give credit to Ignatieff and the Grits for supporting the tax, and not using it for partisan advantage against a political opponent (like what Hudak is doing in Ontario, regardless of never rescinding the HST if elected).

Count me as one of these fiscal conservatives who likes this tax. Yes I know this will affect me personally as these VAT's (value added taxes) target consumption, but likewise as with JimmE, this will greatly help my industry - which is good for Ontario in the long-run.

Also this is a nice, easy to calculate tax that can't be cheated unlike income tax. Speaking of which anything that reduces (and helps to eventually eliminate) that entrepreneurship killing, illegitimate tax on income will always be welcome by me.

The problem with McGuinty's HST is the same problem Mulroney had with the original GST was the right tax, just introduced at the wrong time. Governments should be rolling out these tax shifts during good economic times, not during recessions.

Gordon Campbell's problems I think are worse, as he's already introduced a Carbon Tax out there in addition to this HST. I can see why BC residents are pissed, but I ask them this. Do you really expect the NDP to rescind the tax? Likewise don't expect some new SoCred V2.0 party to emerge and eliminate the HST either, because deep down real fiscal conservatives know as far as taxes go, the VAT-style ones are the good ones.