Friday, March 27, 2009

Ontario - Liberals to plunder

The motto of Ontario use to be ‘yours to discover’. If nothing else McGinty’s motley gang of thieves have shown Ontario is the place to be for liberals to plunder. Forget the budget per say - let’s talk harmonized sales tax. The Globe and Mail:

Ontario will convert its retail provincial sales tax (PST) to a value-added tax structure and combine it with the federal Goods and Services Tax (GST) for a single 13 per cent tax beginning July 1, 2010.


Businesses pay the PST on purchases they make in the course of providing goods and services for sale. As a result, that tax can end up hidden in the price of finished goods and services, leading to an indirect tax.

Under harmonization, businesses can claim tax credits on those purchases, as they already do with the GST, resulting in $3-billion of savings for businesses each year. The government expects up to 90 per cent of those savings will be passed on to consumers, based on studies of other jurisdictions.

Businesses will save a further $500-million a year on the costs of administering a single tax instead of two, according to the budget documents, and the cost of exports will be reduced.

What gets taxed?

The single tax of 13 per cent applies to most goods and services already taxed by the GST, including “intangible properties” such as trademarks, rights to use patents, movies and music downloaded from the Internet, as well as options to purchase property.

That means the province will begin collecting tax for the first time on a number of new items, from haircuts to gym memberships, and from taxis to postal stamps. Officials did not provide a count of how many new goods and services will be taxed by the province.

Ontario will exempt books, diapers, children's clothing and footwear, children's car seats, car booster seats and feminine hygiene products.
Wisely, the provincial liberals offered no hard and fast figures in what a cash cow it will be while it sticks it to Joe and Jane Taxpayer. Oh, and that ‘adjustment rebate’ will hardly sweeten the knife going in when our salaries fail to keep pace with the rate of inflation.

Now some will tell you ‘consumption’ taxes are a good thing, and they can be, but not as long as you are still hit with income taxes and health taxes, and municipal sales taxes - if you have the misfortune to live in the Centre of the Universe.

Don’t confuse this move with what happened to New Brunswick in the 90’s. At the time of entering into a harmonized sales tax agreement with the federal government the province of New Brunswick had to claw back its sales tax from 11% to 8% so while the tax raised in some areas it dropped in others. There is no corresponding agreement for the Liberals to claw back their tax rate to 5% from 8%. A straight across the board 10% tax I might have gone for but a flimsy rebate cheque. Nah, I don’t think so. While the tax gremlins are keeping their hands off children’s clothing and diapers it has now just increased the cost of driving those little tots around from here to there, keeping them warm at home or getting their hair cut.

It has been at least 4 years since I last visited New Brunswick but when I did I was simply floored by the substantially higher cost of simply everything. Forget clothing and shoes, tires and other miscellaneous costs – not only were these items higher overall, the price of simple basic stables such as milk, eggs, rice and flour were substantially higher. Sure the housing costs were lower but the price of everything else simply floored me.

I expect those rebate cheques will be cold comfort for those of us who shall still have jobs while our salaries fail to pace with the rising cost of everything else. I work in the private sector, and this year it was announced; not only would there be a hiring freeze but a salary freeze as well. I expect July 2010 will see us all lucky just to be able to go to work and I doubt sincerely the ‘salary freeze’ will have thawed. And to expect business to pass on the ‘tax’ savings to the consumer flies in the face of current reality for which most businesses are operating in - a time of substantially reduced bottom-lines. Any 'savings' won't be passed on to the consumer but used to prop up the businesses bottom-line.

Oh yeah, those gang of political incompetents who have the utter chutzpah to call themselves conservatives can legislate themselves to perdition for all I care for their opinions.

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