Chow Time

In Financial, Fresh on October 30, 2009 at 8:28 AM

I got this pamphlet in the mail. I live in the Trinity-Spadina riding, which is currently run by Olivia Chow. Normally, I just toss pamphlets like this away, but there was something compelling about the woman on the pamphlet. You see the way she has taken off her glasses and is pinching the top of her nose? As an accountant, I know exactly what that is about. That’s what you do when the numbers don’t make sense (or sometimes, you do that when you’re adding a really long list of numbers, and then you type something in wrong and have to start over).

Let me walk you through the document. According to the NDP literature, the first important thing you need to know is that there is a “tax grab” going on and everyone is in on it (except for Olivia Chow and Jack Layton) . Harper, McGuinty, Ignatieff – all of them grabbing tax like a bunch of tax grabbers.

Then she walks us through some of the items that will be subject to the HST, and therefore have additional sales tax next year. Coffee. Donuts. Newspapers.

What kind of red-blooded Canadian wouldn’t buy those things? It’s clear she’s aiming for a nerve.

Then she drops the bomb. She explains how “they” are getting away with it.

“Stephen Harper’s conservatives are bankrolling them with $4 Billion of your own tax dollars.” Our worst fears confirmed. They are exchanging our money for more of our money.

Of course, there are some details left out of the pamphlet. For one, she is missing a portrait of her and Jack Layton together. I can provide that:

The other thing missing is that Chow never does explain why “they” are taking our money (and exchanging it for more money). I will do that too.

Ontario is in more trouble as compared with the rest of Canada. Look at this graphic, courtesy of the globe (no seriously, look at it, it’s cool). You will see the national unemployment average of 8.7%. You might also notice that most of the Ontario cities have a higher unemployment rate than the National average. As a nation, we are lucky to be so resource rich (I’m looking at you Western Provinces), and to get through this recession, we need to share that wealth across the board. That means Ontario gets more federal transfer payments to support our unemployed. The deal, as I understand it, is that in exchange for continued federal transfer payments to cover what will be whopping deficits in the years to come, we give the feds our PST.

It’s a cheap trick to blame McGuinty for participating in the HST. I can’t imagine that he really had a choice in the matter. To function properly as a country, it only makes sense that if you are completely dependent on the federal government transfer payments to make provincial ends meet, then the federal government should have control over your sources of income (such as taking over the sales tax).

However, from what I see, Ontario is actually in much more trouble than people think. We can use these transfer payments over the next few years to create jobs, extend employment insurance, subsidize adults to get retrained in school, but these are just temporary solutions. The elephant in the room is how we plan to replace the old manufacturing jobs that we have lost?

Getting through the next few years is a no-brainer. Redefining the Ontario economy for years to come is actually the exercise that requires thought, and I don’t see anyone thinking about it.

  1. Thanks for these two posts on Hst. They've really cleared up a major sticking poi t. Ie why. I'd little inkling that this was an abdication of taxation rights. (gives me minor tea party tremors… I mean the real one)the question of how Ontario replaces these manufacturing jobs aside (ignoring the debt power generation has stepped into this void before and could be poised to do it again) what remains what you mentioned in your previous post is how Ontario will govern it's tax base in the face of the Hst/ VAT. Just to be clear: do they give up all ability to manage this on a per good basis? Having recently come back from France – where the various VATs are shown on a per good basis – this seems somewhat silly. If they can identify luxury goods within their taxbase, can't they increase accordingly? The question likely comes from me being, as you indicated, largely ignorant of tax processes in this country.

  2. Given how the GST works already, I suspect that the HST will be administered in the same way. In other words, if the federal government chooses to include a good/service as HST taxable, that will apply to all provinces without discrimination. But that's a really good question. Let me see what I can find.

  3. my plan to screw them bacl:i am going to eat muffins and drink tea in the dark while letting my hair grow out.suckaz!$$!$!

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