McGuinty Government Tables HST Legislation
Bill Includes Corporate Tax Cuts
The Harmonized Sales Tax (HST) was first discussed prior to the McGuinty government’s March 2009 budget. The controversial tax would see the province’s 8 per cent provincial sales tax (PST), combined with the federal Goods & Services Tax (GST). The new policy is to take effect July 1, 2010.
HST Legislation Includes Corporate Tax Cuts, Thousand Dollar Taxpayer Grants
The legislation, introduced Monday Nov. 16, 2009 includes measures meant to cushion the blow for businesses. The bill would see the corporate tax rate fall from the current 14 per cent to 12 per cent, and eventually to 10 per cent. Manufacturers that currently pay 12 per cent income tax would see their rate cut to 10 per cent effective July 1, 2010.
Adding to its financial woes, the province has slipped into “have not” status. This means other provinces support Ontario through increased transfer payments from federal coffers. By giving businesses corporate tax cuts, the McGuinty government hopes to make Ontario into a competitive place to do business. In comments published by the Ottawa Citizen Finance Minister Dwight Duncan admitted business can’t continue as it’s currently conducted: “We cannot continue along with the status quo.”
The change would add an additional 8 per cent in tax to many items including gasoline, haircuts and home heating bills. The legislation will also make one-time only grants of $1,000 available to taxpayers to help with the changeover. In comments published by Canadian Press, Revenue Minister John Wilkinson detailed the tax changes: “In July when we bring in the HST, we’ll be more than doubling the permanent tax grants that are available to low income Ontarians, seniors on a fixed income and middle income families with a lot of children.”
Wilkinson in the same article applauded his own government saying; as of Jan. 1, 2010 Ontario will have the lowest personal income tax of any province.
Progressive Conservatives, NDP Ready To Fight HST
The opposition parties are preparing to fight the McGuinty government on the HST. Progressive Conservative Leader Tim Hudak in remarks published by the Canadian Press called the tax a “3 billion dollar greedy tax grab.” Because the idea of harmonization has been traditionally a Conservative one, his stance on it puts him at odds with his federal Conservative counterparts. Hudak has also taken to calling it the “Dalton Sales Tax.”
The New Democratic Party (NDP) meanwhile argues the HST will increase the cost of everyday items. In comments published by Canadian Press, NDP Leader Andrea Horwath said she sees the HST combined with the corporate tax cuts as unfair: “There’s no doubt people will see this as an unfair tax because it creates a burden on people… and it’s unfair at a time when the little guy is struggling, big corporations are going to get a huge tax giveaway.”
Both parties are fighting to have public hearings on the legislation. Harmonizing sales taxes has proven to be a political gamble for the party in power. When Nova Scotia harmonized its sales taxes voters responded by voting out the sitting Liberal government.
Finance Minister Dwight Duncan
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