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The truth about Conservative claims that NDP would raise GST

NDP MP Olivia Chow holds a news conference on Parliament Hill in Ottawa on Monday, October 1, 2012.

Sean Kilpatrick/THE CANADIAN PRESS

The Conservatives have a new line of attack when it comes to the NDP, using television panels and Question Period exchanges to claim the Official Opposition is advocating a GST hike.

The NDP say the Conservatives are lying.

So what's going on?

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The Conservatives point to an exchange this month at the House of Commons transport committee, where NDP transport critic Olivia Chow suggested the committee study how infrastructure is funded in Canada. Ms. Chow proposed several funding options for study, including the idea of a "penny tax," a 1-per-cent sales tax that would be levied by municipalities to pay for infrastructure.

The entire transcript of the Nov. 1 meeting can be found here. In response to objections from Conservative MPs, Ms. Chow clearly stated that she was only proposing that the committee hear witnesses on the idea and was not taking a position for or against a penny tax.

Here is how Ms. Chow explained the proposal in committee:

"A few years ago, the Federation of Canadian Municipalities and the big city mayors came up with the one-cent GST proposal. If you want me to go and find details of how that one-cent GST works, I could do so. This is not a new idea. It is something that has been proposed by the municipalities and the big city mayors. They ran a big campaign on it. Is that a good idea? I don't know. I think it's useful to take a look at what had been proposed in the past and what other countries have done. I'm not saying that any of them make complete sense, but at a bare minimum, we should look at and seriously consider some of the proposals that have come directly from municipalities and big city mayors."

The proposed study was rejected by the Conservative-dominated committee, but the sales tax now lives on in the talking points of Conservatives.

Don Martin, host of CTV's Power Play, recently decided to air footage of a political staffer coaching junior minister Maxime Bernier on how to accuse the NDP of favouring a "one-per-cent sales tax on Canadians."

As for municipalities, they continue to argue that property taxes are not the best vehicle for raising revenue. They'd like a discussion about reforming the way taxes are collected, but appear to have put their penny tax idea on the backburner in favour of a call for increased transfers from Ottawa.

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Still, the idea is not dead.

Calgary Mayor Naheed Nenshi noted last week during a meeting of big city mayors in Ottawa that a group of Calgary business leaders are currently pushing for a referendum in favour of a penny tax to build local infrastructure.

"Certainly the idea is appealing in some ways. It's particularly appealing for cities where there are a lot of people who don't reside in the city and don't pay property taxes but come into the city everyday and utilize city services," he said.

Mr. Nenshi noted that Calgary is in a unique situation on this issue because Alberta has no sales tax. Other provinces could theoretically allow a municipality to collect part of a higher provincial sales tax, but in Alberta, any penny tax could only be collected as an add-on to the federal Goods and Services Tax.

"I'm not particularly in favour of it or against it," said Mr. Nenshi. "But I think what it shows is the need for us to rebalance our tax revenues in this country."

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