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Taxing disharmony abounds Add to ...

They say failure is an orphan and victory has a 1,000 fathers. But that's not the case with the harmonized sales tax, which is angering taxpayers in Ontario and British Columbia.

The HST is supposed to be a smart public-policy victory that keeps Canada attractive to investors. But both its political fathers in Ottawa -- the federal Liberal and Conservative parties -- seem inclined to keep a safe distance.

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Calling it the harmonized sales tax implies it's merely a merger of the GST and a provincial sales tax in any given jurisdiction. But the HST is really a tax break for business, one that shifts part of the corporate tax burden to consumers. It's a popular move for investors, a group that recession-plagued provinces are eager to keep happy.

After the provincial sales tax and the goods and services tax are merged into an HST, businesses no longer have to pay provincial sales tax on business inputs such as furniture or machinery. Consumers, meanwhile, must start paying the equivalent of provincial sales tax on things that were previously exempt from PST, from haircuts to movie tickets to realtor fees.

The former Liberal government in Ottawa promoted the HST and guided its adoption in the Atlantic provinces years back. After the Tories won office in 2006, the Harper government took up the cause and offered provinces what amount to billions of dollars in bribes to adopt the HST. Both British Columbia and Ontario stepped up to the plate.

Today, now that the HST's generated a sizeable political backlash in Ontario and B.C., neither federal party seems to want to embrace it that warmly. The risk, of course, is some of the Boston Tea Party-type anger gets redirected at them, just as a federal election looms.

The Harper Tories are staying well away from the nasty provincial debates --- and only relatively quietly tout its adoption by B.C. and Ontario as one of their accomplishments while in office.

Liberal Leader Michael Ignatieff, on the other hand, is both attacking the tax and embracing it. He recently criticized the HST on CTV News, saying "the Harper sales tax, the thing that concerns us is that the Harper government has, during a time of recession and economic difficulty, basically pushed sales tax harmonization across the country."

But then this morning, Dalton McGuinty told reporters he'd received Mr. Ignatieff's backing for the HST. According to the Ontario Premier, "We have secured Mr. Ignatieff's commitments to moving ahead with the single sales tax should he earn the privilege of serving Canadians in government."

Follow on Twitter: @stevenchase

 

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