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NDP Leader Andrea Horwath and Progressive Conservative Tim Hudak participate in the Ontario election leaders debate in Toronto on Sept. 27, 2011. (Frank Gunn/Frank Gunn/The Canadian Press)
NDP Leader Andrea Horwath and Progressive Conservative Tim Hudak participate in the Ontario election leaders debate in Toronto on Sept. 27, 2011. (Frank Gunn/Frank Gunn/The Canadian Press)

In Ontario, New Democrats and Tories tax reason Add to ...

As their first priority, the NDP opposition in Ontario will introduce a private member’s bill to remove the HST from home heating bills. The PC Party will support the bill.

While this may be smart politics, it is atrocious public policy that runs against the interests of the NDP’s own constituents and takes advantage of a ridiculous set of precedents that pervert the basis of Parliament.

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The long-standing tradition of the British parliamentary system is that tax matters are confidence bills. The reason for this is simple: tax is the basis of finance and the budget. Without consensus among the ministers, the budget is an impossible task. Thus a tax matter becomes de facto a measure of confidence in the ministry as a whole.

But confidence is only automatic on government “ways and means” bills. It is not present on private member’s bills, and they are not confidence matters (unless the government wants it to be.) That is even the case when they lower taxes. Strangely, private member’s bills can cut taxes, but they cannot increase them.

This is a bizarre loophole that undermines the critical convention of responsible government.

Think of it like this. Tax cuts of any sort and for any group cost money. There are lots of worthy reasons to cut a particular tax for a particular group. But for each one, the finance minister will have that many fewer dollars to pay for health care and education that year, and the difference will have to be made up by spending cuts, tax increases elsewhere or borrowing the money in the form of debt that will have to be paid off with interest.

For instance, removing the HST on home heating will cost $350-million a year, according to the NDP costing. Passing this bill will put a $350-million hole in the budget, with no indication of where the plug will come from. In other words, the opposition is writing a cheque and the government and citizens have to cash it.

For the Conservatives, this is a no brainer. They ran on a similar pledge. They are also the anti-tax party, and one committed to instituting a smaller government.

That didn’t prevent them from raising concerns about a similar private member’s bill to expand a tax loophole introduced by the NDP in 2002. Said then-house leader Chris Stockwell: “On a point of order, Mr. Speaker: I haven't seen the bill and I don't know the contents of the bill, but I would just ask that you review the bill for its orderliness with respect to the cost components to the financial base of the province of Ontario.”

Speaker Gary Carr checked the precedents and found that private member’s bills that cut taxes are in order, a bizarre situation that provides a backdoor to smaller government:

Marleau and Montpetit's House of Commons Practice and Procedure states on page 898:

“With respect to the raising of revenue, a private member cannot introduce bills which impose taxes. The power to initiate taxation rests solely with the government and any legislation which seeks an increase in taxation must be preceded by a ways and means motion. Only a minister can bring in a ways and means motion. However, private members' bills which reduce taxes, reduce the incidence of a tax, or impose or increase an exemption from taxation are acceptable.”

Furthermore, citation 998(1) of the sixth edition of Beauchesne states that “[a]private member may move that certain specified taxes be readjusted and that the scope of tax exemptions be enlarged.”

Our own more modern precedents agree with the position taken by these authorities.

Therefore, I find that the Bill 233 does not offend standing order 56 and is in order.

There is a brake on all of this, luckily. The government house leader is the only person who can call a bill for the third reading and final vote that would pass the bill. So winning the second reading vote on Thursday will not secure passage. It puts it in the hopper for arguments at the house leaders’ meetings.

Now, the NDP and PCs can hold the entire province hostage by refusing to pass the budget or any other bill until the HST on home heating bill is passed. But that would be even more irresponsible than introducing the bill in the first place. The real question is why the NDP would introduce this as their priority legislation.

The system of tax cuts through private member’s bills is a good thing for Conservatives. As the small government party, institutional situations that lower the size of government are good. A system biased toward lowering tax rates is a good thing to them.

However, it is the New Democrats using this conservative system to create a loophole that it is difficult to portray as progressive. Removing the HST on home heating will have a some positive impact for those on fixed income, but for every grandma on a pension who receives the break, there is a 1-per-center investment banker who got it as well. And in doing so, they increase the pressure on the public health care system that the elderly frail grandma relies on far more than the investment banker.

Remember, private members bill can’t raise taxes, so pointing to raising corporate taxes is not an available offset. If the NDP wants to be responsible, they would have to list specific programs to halt or another available offset on the spending side.

The NDP should rethink their commitment to using private member’s bills to reduce taxes. Every reduction they make will turn into a cut to social services on the other side of the budget.

If the government is smart, they will demand the NDP and PC members who support the bill list exactly where they want the budget cuts to be made to make up for this loss of revenue. Granny won’t be happy if it cuts her oxygen tank.

 

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