Some of the media coverage on Ontario’s move to harmonize its sales taxes with the GST has verged on the hysterical. Our local paper, The Ottawa Citizen, for instance features an online calculator which purportedly tells you how much extra you’ll be paying on such items as gasoline, electricity, internet services, hair cuts and home heating. The paper was deluged with outraged readers complaining about a “tax grab” and dismissing any notion that businesses will pass along their own tax savings to the consumer.
A new report by the Canadian Centre of Policy Alternatives (not exactly what you’d call a “business friendly” organization) titled Not a Tax Grab After All: A Second Look at Ontario’s HST finds that the HST will be a wash when it comes to impact on the pocket book on most families. The report finds that the median gain across all families in Ontario will be $2 and the average loss will be $37, excluding the impact of the one-time Ontario Sales Tax Transition benefit.
To the extent that the facts have a bearing on the politics of the issue, the government’s HST plan should survive the initial political onslaught. Any fundamental tax change that yields no big winners or losers is, almost by definition, a good political tax change. And that, our analysis suggests, is what harmonization will deliver in Ontario.
The CCPA is not alone. Andrew Coyne recently wondered what the fuss is all about considering the HST has proven to be a wash in Atlantic provinces that had implemented it earlier. It is distressing to see that the debate over harmonization has gotten so partisan that the worth of an idea is determined by who introduced it rather on whether it is a good one.
