How are the McGuinty Liberals changing the sales tax system?
On July 1, 2010, the McGuinty Liberals plan on bringing in a new sales tax system, one that blends the GST and the PST to create a harmonized sales tax (HST).  The tax will be set at 13% – 5% for the GST and 8% for the PST.

What’s going to change?
There is a long list of goods and services that are subject to the GST but are exempt from the PST.  For example, Ontarians pay GST on gas at the pump and the home heating bill but not PST. 

Those previously-exempted goods and services will be subject to the HST, meaning that they will see an 8% sales tax hike when the HST is introduced.

The list of goods and services that used to be charged 5% that will now be charged 13% includes items listed here

Who loses?
The HST will cost you more – it makes everything more expensive, from the basics (gas at the pump, home heating, or the morning coffee) to the little extras in life (hairstylist, gym membership, theatre). 

According to information compiled from Statistics Canada, the HST will cost the average Ontario household over $600 more per year, every year. In gas and home utilities alone, the 8% tax hike will cost the average household more than $300 a year.  Those costs will shoot up with major decisions like buying or selling a home or paying for a loved-ones funeral.

Won’t my family come out ahead thanks to the government compensation?The cornerstone of the McGuinty Liberal compensation package is a one-time cheque.  The HST is a permanent sales tax increase, one that will be felt by Ontarians day-after-day, year-after-year at the pump, the coffee shop, or when paying the monthly utility or internet bills, buying a newspaper, taking the Greyhound, going to the gym, or sending a child to summer camp.

Cynically, the McGuinty Liberals think they can hide a permanent tax increase with a one-time taxpayer funded bribe. Join us and prove they’re wrong.

Why do this?
While everyday Ontarians have to pay higher sales taxes, businesses will receive billions of dollars in refunds for the sales taxes they pay. On top of that, the McGuinty government is giving away $2 billion a year in corporate tax cuts.

New Democrats think that money will help our economy more if it stays with the people who make our economy work. Corporate income tax cuts will reward companies that are already profitable - like Scotiabank, which recently posted a quarterly profit of $872 million and paid their CEO $7.5 million last year. That’s good news for Scotiabank – but it’s not a good reason to give them a tax break.

The businesses that won’t benefit from McGuinty’s corporate tax giveaways are those that are losing money, laying off workers, cutting hours, or slashing salaries and benefits. In other words, the very businesses that need some help to get back on track are the ones being ignored by the McGuinty Liberals’ wrongheaded tax plan

Won’t businesses pass on their savings through lower prices?
That would imply oil and gas companies will pass on their savings to everyday Ontario families. When’s the last time that’s happened?

While it’s possible that businesses in certain sectors will pass on some of their savings, everyday consumers will bear the brunt of the higher sales tax.

Doesn’t this mean a tax cut for 93% of Ontarians?
The Minister of Finance is quick to point to the number of Ontarians that will receive an income tax cut from his plan. That figure is factually correct but remarkably misleading. For many families, the income tax changes will not offset the costs of the higher sales taxes.  After all, we’re talking about 8% on everything from gas at the pump to the morning coffee, and it adds up quickly.

Wasn’t harmonization a success on the east coast?
Businesses pushing sales tax harmonization point to lower prices in the Atlantic provinces after harmonization.  But what they aren’t saying is that for Nova Scotia, New Brunswick and Newfoundland, sales tax harmonization meant an actual decline in the sales tax rate.  For example, sales tax harmonization in Newfoundland led to a 5% sales tax rate reduction.

In Ontario, that simply won’t be the case, a fact pointed out by University of New Brunswick economists David Murrell and Weiqiu Yu:

“The three participating provinces had the highest sales tax rates in the country, and reducing those high tax rates to 8 percent (along with changing the tax bases) ended up benefiting consumers. But sales tax rates in Quebec, Ontario, and in the western provinces are clearly lower than the old PST rates in the participating provinces. It might have been the case that in the other provinces consumers would lose…”

Don’t we need corporate tax cuts to stay competitive?
There’s more to a healthy economy than low taxes. Before we invest more of our hard-earned money into tax breaks for business we need to consider other measures that can create and sustain jobs. Public health care eliminates the need of providing expensive health insurance to employees. Good roads help transport goods more efficiently. A high quality education system is critical to a skilled and productive workforce. Most importantly, what can we do to help the people who make the economy work?

Ontario businesses already pay significantly lower taxes than our nearest competitors in the US. In fact Canada’s effective corporate tax rate is lower than that of the US, Japan, France, Korea, Brazil and India. From 1999 to today, the Progressive Conservative and Liberal governments have provided over $25 billion in corporate tax cuts. That astonishing high figure casts a lot of doubt on the claim that lower corporate taxes trigger job creation and economic growth. After all, in exchange for $25 billion in taxpayer-funded assistance, Ontarians haven’t seen the job gains or economic growth they were promised.

Meanwhile, consumer confidence is shaky. The Conference Board of Canada estimates that Ontario’s consumer confidence is down nearly 20 per cent since 2007. A new tax won’t make Ontario families feel any better about making new purchases.

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