The Shotgun Blog
Wednesday, August 26, 2009
In support of HST
Dalton McGuinty is being accused of attempting to raise taxes by the Harmonized Sales Tax. Because people will be losing their exemptions, buying certain products will cost 6% more than they did before. I respond, "goodriddance to these demand side subsidies."
Why is the government in the business of exempting taxes for people who buy government approved products? Why should someone by exempt from paying taxes because they make different choices than another person. This is a form of social engineering. It is an attempt by the government to manipulate our behaviour in ways that the politicians think are good.
I admit that this is a rather benign form of social engineering. More like the soft hearted mother who gently reminds her children to eat their veggies than the stern controlling mother of George Orwell's nightmare. Soft-hearted and benign or not the state is not in the business of motherhood. It is up to individuals to decide what is best for themselves.
I write all this but those who are fans of such subsidies have nothing to fear from the HST. Mr. McGuinty has offered plenty of spending and tax credits to tax the place of the PST exemptions. Those foaming at the mouth about a tax increase should take a breath and look at the whole proposal. I wish it was true that these subsidies were being eliminated, but it isn't.
So with all this said, why would I support the HST?
The HST has two advantages:
1. It makes it simpler and cheaper for businesses to pay taxes.
2. It cuts down on the need for provincial bureaucracy.
I do not see why any conservative would complain about either of these outcomes. The Liberals have done a lot of stupid and horrible things in Ontario. The HST will not be one of them.
Posted by Hugh MacIntyre on August 26, 2009 | Permalink
I'm interested to see what the Ontario PC supporters who are criticizing the harmonized tax say when the time comes for them to stand up for the federal party, whose government gave the provincial government financial incentives to harmonize the taxes and are trying to convince other provinces to do the same.
Posted by: Cheryl | 2009-08-26 11:04:22 PM
Tax increases can never be supported, while simplifications can.
Perhaps of the HST/PST rate would be reduced from the current 8% (not 6%) to let's say 4% (while being "harmonized"), people would be less negative.
Posted by: Johan i Kanada | 2009-08-27 1:49:23 AM
The government not taxing a particular service or good is not a subsidy. It influences behaviour in ways similar to subsidies, but making lower taxes sound like the redistribution of wealth is incorrect.
There is not a requirement that a tax apply to all goods and services. If the state decides to steal less, this is not something that should seen as a bad thing. It only looks like a "subsidy" because another level of government has imposed a more comprehensive tax. The PST pre-dates the GST by some years, so its intention was not as a subsidy. Is it a "subsidy" that the government lets you keep the other half of your income? Ideally, yes, taxes should be applied equally but that's not going to happen. The loopholes are breathing room for the rest of us.
Attempts to close tax loopholes are not about making things easier for businesses, they're about raising revenue for the state. If McGuinty truly wanted to make this move revenue neutral he would have lowered the PST. He didn't. These temporary measures he's implemented will be gone in a few years, the permanent hike will remain for decades.
As for reducing the need for provincial bureaucracy, do you seriously believe anyone in the Ontario Public Service will lose their job over this? Or will they just be reassigned to other duties? Perhaps more aggressive auditing of taxpayers? The point is to starve the beast, not make it easier for it.
Posted by: Publius | 2009-08-27 6:07:55 AM
Albertans I'm sure do not want a nation wide PST, we likes our non PST paying ways.
Posted by: Pete | 2009-08-27 7:31:40 AM
Anytime that the government takes more money from one person than they do another person it is a redistribution of wealth. In this way every tax system is a redistribution of wealth (even the flat tax). My concern is in keeping such redistributions as fair and non-interfering as possible.
I call it a subsidy because that is effectively what it is. It reminds me of an old Dilbert cartoon, the evil HR director tells the boss that he doesn't need to reward his employees merely punish them less.
Say I want to purchase one of two items of the same real prize, item A is approved by the government but item B is not. If I purchase item A then the government will punish me less than if I purchased item B. This has the same effect and the same dangers as if the government had given me money to purchase item A. I admit it is a better way to do this bad thing, but I don't find that very heartening.
Your last point is a good one. It is unlikely with the current government that HST will lead in a real reduction in government. But consider that government is expanding constantly; these civil servants are likely to be redeployed to fill this growth. Thus government does not shrink but at least it does not grow as fast.
I'm not sure what your point here is. There is a nation wide sales tax already and there is no one proposing to make provincial sales tax mandetory.
Posted by: hughmacintyre | 2009-08-27 10:11:32 AM
Publius has it right and said it better than I could have.
Posted by: Alain | 2009-08-27 11:24:25 AM
The government knows full well that the HST will raise hundreds of millions for their coffers. There is only one taxpayer that will bare the brunt. It may simplify some of the business paperwork but the primary effort is to screw the taxpayer. They are very good at that. Notice how they shy away from a flat tax? They would not be able to play their smoke and mirror games. Any time any level of government talks taxes it means less money in the consumers pocket.
Posted by: peterj | 2009-08-27 10:18:53 PM
I think that that using taxes instead of the blunt force of the criminal law is the best way to encourage healthy behaviors. Sin taxes on booze fatty foods, and other unhealthy choices do not bother me. If a particular buying behavior is going to cost society at large money in the long run then it is fair to tax those purchases more to compensate society for future losses that not everybody is contributing to. So go ahead and slap a 10 dollar tax on each gram of cannabis, and I will gladly pay it as part of the cost of being free to make my own choices.
Posted by: DrGreenthumb | 2009-08-28 9:28:57 AM
lots of personal choices cost society. Last night I ate chicken wings instead of a salad. Such a decision will bring about a greater healthcare cost. Does this mean that you support taxing chicken wings more than salads?
How about if I decide to hit my head against the wall? That will almost certainly result in a healthcare cost. Would you support a head bashing against the wall tax?
In my mind if you want a state funded healthcare system you are going to have to accept that some people are going to cost more to take care of than others.
Posted by: hughmacintyre | 2009-08-28 9:38:22 AM
Hugh you make a rather common mistake in appearing to place blame on the state funded healthcare system. Please note that the prohibition zealots are every bit as active, and successful, south of the border where state funded healthcare does not (yet) exist. This has everything to do with public apathy and complacency allowing the prohibitionists to win.
Posted by: Alain | 2009-08-28 11:49:46 AM
Alain, I was just responding to Greenthumbs point. Many people in Canada use the welfare program and healthcare program to excuse interfering in people's lives.
Posted by: hughmacintyre | 2009-08-28 11:59:18 AM
Albertans support anyone who pays taxes for their social welfare programs
for anyone on social welfare now, Corporations included, the cops too..
Posted by: Albertans | 2009-08-31 11:02:43 AM
Actually HST would do more harm, its the government way of making money.
they want to spend money on golf trips, sex change, nose jobs, make their parts longer, or tighter.
Wasting money at local clubs, strip clubs all manner of wasting money.
heck even remove the flab from the butt cheeks and have those fancy feasts at those 2 star restaurants.
The reason I switch to NDP and to Conservatives, so I wouldn't have to deal with sick douche bags aka the Liberal Party.
Posted by: Mr B | 2009-09-25 2:28:54 PM
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