The debate over the introduction of the Harmonized Sales Tax (HST) in Ontario and British Columbia is getting curiouser and curiouser, as Alice would say. In fact, the entire Canadian debate on value added tax has a decided Alice In Wonderland sense to it.
The two-part HST value added tax with its federal and provincial components became a part of the Canadian tax regime in the 1990s after the federal portion (GST) had been implemented by the Brian Mulroney Tories as a replacement for the export-killing 13.5 per cent Federal Sales Tax. In a stunning 180 degree turnabout, however, Jean Chrétien’s Grits embraced the GST after successfully campaigning against it.
The Liberals, who had opposed the value add tax concept, once elected, encouraged New Brunswick, Newfoundland and Labrador, and Nova Scotia to merge their provincial sales taxes with the more efficient, business investment friendly GST. So the Liberals were the first political party to do a complete about face on value added tax; they were not, however, the last.
The Tories also seem to have an ambiguous view of the unpopular value added tax. While at the federal level Tories seem to embrace the concept—after all, they introduced it—at the provincial level they are attacking it hammer and tongs. Against all logic, Tim Hudak’s Progressive Conservatives are opposing Dalton McGuinty’s plan for harmonization in favour of retaining the expensive-to-administer, investment-killing Ontario Provincial Sales Tax.
Mr. Hudak’s party could campaign for a lower rate of tax to decrease the burden on Ontario consumers, but have chosen instead to oppose harmonization outright. A wrong headed decision, but a politically popular one, apparently.
The New Democrats have opposed value added taxes from the beginning—even reversing an early attempt at harmonization in Saskatchewan shortly after the GST was introduced in 1991—and seem to have won a recent by-election in BC by opposing harmonization there. However, that same party screamed bloody murder when Stephen Harper’s Tories lowered the federal portion from seven per cent to five percent.
Is it or is it not a good idea to use a value added tax as part of our tax regime in this country? From watching the antics of all three national political parties, one will assume the answer is, it depends. While parties are in power they like it, when in opposition they hate it. Except, of course, the Dippers—they like it when the Tories want to reduce it, but hate it if the provinces try to introduce it. Phew!
Is it any wonder that so many Canadians are fed up and can’t be bothered to turn up at the polls for elections?
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© 2009 Russell G. Campbell
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