Wednesday, September 16, 2009 11:07 AM
Harper's HST revisionism
Robert Silver
From Stephen Harper's 2008 budget:
"Replacing remaining provincial retail sales taxes (RSTs) with value-added taxes harmonized with the GST is another area where provinces can contribute to strengthening Canada's Tax Advantage. Provincial RSTs impair competitiveness because they apply to business inputs, increasing production costs and deterring investment. By comparison, a value-added tax system provides most businesses with full tax relief through the input tax credit mechanism. Provincial sales tax harmonization is the single most important step provinces with RSTs could take to improve the competitiveness of Canadian businesses."
The single most important step we can take to strengthen Canada's "Tax Advantage". Single most. Not one of the five biggest. Not something we should strive for by 2017. In Stephen Harper's words, the single most important step we could take to improve the competitiveness of Canadian business is harmonizing the GST and provincial sales taxes.
And he said so not in a random scrum. Not in an off-the-record discussion with some reporters. Harper said this is the most important step we could take to improve our competitiveness in his budget.
(I'm concerned I haven't quite made the point that Harper was pleading with the provinces to do this yet but I will move on now)
From today's Star:
"Finance Minister Jim Flaherty and fellow Conservatives are distancing themselves from the harmonized sales tax...federal Conservative sources have told the Star that earlier in the summer, officials in Prime Minister Stephen Harper's office ordered Flaherty to tone it down.'They asked Jim to stop talking about (the tax) so much because it's not helpful,' said one insider."
It baffles me that Harper is fleeing from the only policy he has taken in this second mandate that he can possibly argue is based on principle and will lead to a more prosperous long-term country. But hey, he has home renovation tax credits to wrap himself in so who needs principles.
But before I end this post, let me predict Tim's response: oh come on Rob, sure Jim Flaherty and Stephen Harper have been cowardly hypocrites on the HST but how about Michael Ignatieff? I mean, he's the real story on the HST!
I will respond to Tim's, no doubt humourous response by pointing out that:
1. Michael Ignatieff isn't Prime Minister.
2. He didn't make commitments as head of the federal government to the premiers of Ontario and British Columbia
3. Premiers should be able to count on Prime Ministers when they enter into deals to live up to their end of the bargain (I might even pull out a classic Danny Williams quote to that effect).
Yesterday wasn't the OLO's finest moment on the HST. The federal Liberals need to be hugging premiers McGuinty and Charest as close to their red, Liberal breast as possible right now to have a shot at the election (whenever it comes) and this was unhelpful to say the least. As importantly, opposition parties don't need to oppose the government on every single policy issue. In fact, that's a great way to ensure you stay in opposition for a long, long time. Premier McGuinty and (I think, though who knows any more) Stephen Harper are doing the right thing on tax harmonization. Ignatieff should simply say "I will respect the deals struck between Stephen Harper and the premiers of Ontario and BC on sales tax harmonization". Period, end of sentence, and move on to issues that are winning ones for the Liberals.
