"... A harmonized GST is not something that is contemplated in the BC Liberal platform, but we are committed to improving the system."
That was part of the B.C. Liberal party's response to questions about a harmonized sales tax from the Canadian Restaurant and Foodservices Association prior to the spring election.
With the provincial legislature resuming today, Gordon Campbell's government, rather than basking in the glow of a recent win at the polls, will be stepping into a political inferno. Anger over the coming introduction of a HST next July 1 is building, and feeding into increasing resentment over widespread cutbacks. The blending of the provincial sales tax with the federal GST is expected to lead to savings of more than $2 billion for the business sector, but consumers will pay taxes on numerous items that were subject to GST but exempt from PST. Restaurant meals and new housing will be subject to HST, leading to outrage in those sectors.
But construction, manufacturing, transportation, forestry, and mining, oil and gas stand to benefit, and B.C. businesses will no longer be required to keep track of their PST payments.
Also on July 1, Ontario's Liberal government will blend Ottawa's 5-per-cent GST and the province's 8-per-cent PST into one seamless HST, joining B.C. and four other Canadian provinces that have already harmonized.
Federal Finance Minister Jim Flaherty has been coaxing provinces to climb on board because of the benefits for attracting investment. He's offering a sizable inducement to switch: a cash bonus worth 1.5 percentage points of the gross goods and services tax collected in that province. The offer, and the moves by B.C. and Ontario, has Manitoba pondering whether to jump on the bandwagon.
So, all things considered, is a harmonized sales tax a smart move in tough times, or a disaster in the making?
Today at noon PT (3 p.m. ET) you'll have a chance to ask our panel of experts in a live discussion.
Jonathan Kesselman holds the Canada Research Chair in Public Finance with the Graduate Public Policy Program at Simon Fraser University. He is an expert on taxation and social policies and has won major awards for his work in these areas. His 2001 research led to the development of the Tax Free Savings Account, and his earlier research laid the groundwork for the Canada Child Tax Benefit. Professor Kesselman has a PhD in economics from MIT and he was a professor with the UBC economics department from 1972 to 2003.
He will be joined by Globe and Mail reporter Robert Matas, from our Vancouver bureau, and columnist Marcus Gee, from our Toronto City Hall bureau, both of whom have written about and analyzed the introduction of HST in their respective provinces.
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