Ever since Dalton McGuinty became premier of Ontario I've been mostly indifferent to him and the work of his party. Most things he did seemed OK but nothing was good enough or bad enough to make me care much one way or the other. However with the HST I am definitely taking notice.
Something that bothers me about democracy in Canada is that it does not seem well suited to long term projects. A majority government only has four years to accomplish anything with certainty. They may not win the next election and the new government may abandon the project completely. By definition, a long term project is unlikely to show any benefits right away. Thus, any government that introduces unpopular changes which may have substantial long term benefits risks being booted out of office before those benefits are realized. The general voting public does not seem to understand "long term" very well.
By bringing in the HST, Dalton McGuinty has earned my respect. It will almost certainly cost him and possibly the Liberal party the next election, but he is doing it anyway because he believes it will bring long term benefits to the province of Ontario.
In addition to supporting Premier McGuinty for making an unpopular decision, I also support the implementation of the this new tax package itself. It's not perfect, but it seems like they put a lot of thought into it and have done a lot to deal with increased costs for consumers.
Not that any of the articles or comments about the issue recognize that fact.
Yes, when the HST comes in we'll have to pay a higher tax rate on many common goods and services. But what most people and news articles fail to mention is that the HST is part of a broader package of tax changes that attempt to make the HST revenue neutral for the government and keep the tax burden on any individual at the same level. Personal income taxes are being lowered for everyone. Sales and property tax credits are being increased. And until 2011 there will be additional transitional benefits. Ignoring those transitional benefits, the other changes will more than offset the increased taxes paid through the HST for most families earning less than $70,000 per year. For those earning between $70,000 and $100,000 the extra cost will be less than $200 per year which is pretty negligible.
These numbers come from a very interesting study that I read from the Canadian Centre for Policy Alternatives, an independent research group. The assumptions made in determining the numbers are extremely conservative, ignoring the transitional benefits as well as the exemptions on things like diapers and coffee. I encourage anyone who is interested in reading a balanced study of the issue to check it out: Not a Tax Grab After All
I find it particularly amusing that many of the people I see complaining about the HST change are actually arguing against a net decrease in taxation for themselves. And for those who will have a net increase, the increase is so small that they probably could have recouped it by being productive in the time they spent complaining. I also find it amusing that the HST is being labeled as a "tax grab" when, combined with the cost of the tax cuts, the government will only be taking in about $100 million extra a year. Almost nothing compared to the provincial deficit which is in the billions of dollars.
I haven't even mentioned anything about the potential benefits of the HST. It will save businesses tons of time in administrative duties. There will no longer be "cascading taxes" where PST is applied at every step in the production chain. Both of these will save business a lot of money. Even if none of those savings are passed on, they make Ontario a much more attractive place for business to invest in, potentially creating many new jobs. Finally, the new system will be simpler and cheaper for the government to administer. And once again, even if none of these benefits pan out, the other tax changes make is so that HST will have almost no impact on the annual budget of the average Canadian family.
So what's the big deal? Why is there so much hate on for this change? It's not like this is even a new and untested idea. Internationally, PST style taxation is considered not just obsolete but laughable. Over 130 countries and most of the Atlantic provinces have moved to HST style taxation (also know as "value added tax").
74% of people in Ontario oppose the tax changes. I'm extremely grateful that they did not open up the issue to public debate like the opposition parties wanted. Most of the public that are against the changes actually stand to benefit from them which suggests that they either don't understand or are just ignorant of the details of the full package. We don't need public screaming matches like the "town hall" debates over health care in the US. Those were so bad they continue to make me wonder how the US became the global super power it is.
I don't understand all the opposition, but I'm very impressed by Dalton McGuinty's resilience in the face of it. I wish him the strength to see it through without compromise and I wish him the best in his next job after the 74% of Ontarians vote him out of office in 2011.