Policy Alternatives report on HST - vanished?

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Sunday Hat
Policy Alternatives report on HST - vanished?

I posted somewhere else on this but - a week later - I'm still curious. So here goes...

The Centre for Policy Alternatives made a big splash with a report defending McGuinty's HST - declaring that it would not cost people anything (and wouldn't cost the government anything AND cut taxes for business). It made the front page of the Toronto Star and was followed up by glowing editorials.

But now the report has vanished. I flipped a note to the CCPA and have heard nothing back. Did anyone keep a copy of the original? The whole thing seems odd.

 

RANGER

The organization representatives didn't seem to have a united opinion on this,  just prior to the Star piece I was at an "anti HST" town hall featuring Seth Klein, so I'm sure some kind of in house damage control is on the grill, they have made mistakes in the past and I find it funny that the pro HST material would get "glowing editorials" where as the overwhelming sentiment from the public is that this is a bad idea. 

Sunday Hat

Yeah.

I noticed the Manitoba CCPA published this the same day the vanishing report appeared.

What I don't understand is (a) why the CCPA wants to run interference for Harper and McGuinty? (b) was the report pulled because it was inaccurate or because they don't believe in it anymore?

Sunday Hat

Curiouser. Accidenteal Deliberations blog has not one - but two - copies of the report.

It seems the report was up and then down and then a revised version with completely different numbers was up.

And then down again.

The CCPA says "modificatons had to be done"

They didn't get it right the first two times?

Version 1 says the new sales tax will cost a family with a $70,000 income $600 a year in new taxes. (p8)

Version 2 says a family with a $70,000 income will pay $400 a year in new taxes. (p8)

The numbers change like this on every single example. Are they pulling this out of their asses or what?

Unbelievable.

G. Muffin

How could it not cost us anything?  The food service industry will be decimated (in the new sense of that word).

Sunday Hat

Evidently, these "economists" thought that you could create a tax that would give $5 billion to business, cost the government nothing and cost people nothing.

And working backwards from there they tried to cook up some numbers to back it up.

And when that didn't work they tried it again.

And the CCPA - which I used to respect - published whatever garbage these clowns produced. And is now helping them cover up their mistakes.

Unbelievable.

Sean in Ottawa

I have been surprised that the CCPA could be so out to lunch on this one. I am less surprised that someone is having a second think.

It isn't just the food industry that will get hit-- many service providers -- including many who are self employed are going to take a hit.

 

As I have pointed out in other places, goods people will find and buy from anywhere but services are different in two crucial ways that underline why service taxes are problematic:

1) services are provided for the most part in communities not imported-- they are labour which is another word for jobs.

2) some services are for convenience and some are essential--

The second point is very important because when you tax essential services you are regressively hitting people whether they can afford to pay or not--and when you tax non-essential services you are hitting service providers with an increase that may result in people no longer buying the service (perhaps even performing it themselves). Either way the effect is negative.

As well many people do not fully understand how the tax works. It is in theory a value added tax and not a hidden one. In practice it is actually both and applies to almost everything. Let me explain: There are three tax statuses: taxable, zero-rated and exempt. We all know what taxable means. But how many understand the other two? We hear the word exempt and assume that it means not affected but that is not true. Taxed means you charge tax,  pay the tax you charge less the tax you paid resulting in the tax being limited to the amount charged in the final retail sale. Zero rated means that the person selling retail does not charge tax AND claims the tax paid so all the tax is taken out of the product. Exempt means you do not charge the tax but also do not claim the tax you paid. This is where it gets interesting and the CCPA somehow failed along with many of the public to figure it out. So with the exempt item if you paid 8% on 50% of your cost and your profit margin was 20% then the tax included in the so called exempt sale is 4% of 80% of the sale or 3.2% tax. If you paid 8% on your entire cost with the same margin then there would be an included cost of 6.4% on something the government pretends is not being taxed. Now if the exempt service is used is a product or service that is not exempt the old tax stays in and a new tax is applied. If that service is sold to someone who is exempt then  you have two layers of tax that cannot be claimed one hidden and one not. The final sale could have far more than 8% tax included. (Now of course we are talking about adding this to the GST so we are really talking about 13% but I used 8% because that is the new part of the problem). Using layers of bought and sold services through low margin businesses it will be easy for a final sale to be exempt but actually contain more tax than a product or service that was never exempt. As well, when you pay for a taxed service you are paying the cumulative total of the actual full sales tax-- plus any hidden tax paid by any so-called exempt classes.

In short exempt creates reverse loopholes for the government to tax items far more than people think they are. The concept of exempt only reduces (not eliminates) the tax if there is only one layer of transaction-- but that is in fact rare-- people buy from one party who buys from another who buys from another. If you are in certain sectors there may be a tendency to have more than one layer of exempt service with perhaps taxable services in the chain as well.

So what are the so-called exempt but actually taxed services? All the following goods in BC will include the tax paid to produce the item that cannot be claimed back and therefore has the hidden tax.

  • imports of zero-rated goods (goods that are specifically taxed at zero per cent in Canada, such as prescription drugs)
  • goods imported by a charity or public institution that have been donated to the charity or institution
  • used residential housing
  • long-term residential accommodation (of one month or more), and residential condominium fees
  • some sales of vacant land or farmland
  • most health, medical, and dental services performed by licensed physicians or dentists for medical reasons
  • child-care services (day-care services for less than 24 hours a day) for children 14 years old and younger
  • personal-care services for children, underprivileged individuals, or individuals with disabilities, when provided by a person operating an establishment for these individuals, in either institutional or non-institutional settings
  • bridge, road, and ferry tolls (ferry tolls are taxed at zero per cent if the ferry service is to or from a place outside Canada)
  • legal aid services
  • many educational services, such as courses from a vocational school that lead to a certificate or a diploma to practise a trade or a vocation; or tutoring services for an individual who takes a course approved for credit by a school authority or the education service follows a curriculum designated by a school authority
  • music lessons
  • most food or beverages sold in an elementary or secondary school cafeteria primarily to students of the school and most meal plans provided in a university or public college
  • most services provided by financial institutions such as arrangements for a loan or mortgage
  • arranging for and issuing insurance policies by insurance companies, agents, and brokers
  • certain goods and services provided by non-profit organizations, governments, and other public service bodies, such as municipal transit services and standard residential services such as water distribution
  • most goods and services provided by charities.

Interestingly, this has been explained many times by the proponents of the GST when it was replacing the old hidden taxes and the reason they said a GST is less tax. Of course they refuse to acknowledge that exempt items effectively function exactly like the old hidden tax-- paid in the production of the item, not claimed back and then buried as a hidden tax in the final price.

So maybe someone at the CCPA actually finally considered this.

For your interest using the BC example (I just found it first-Ontario is not much different) these are the small list of zero rated items-- the ones that actually will not be taxed-- everything else will be taxed just some hidden and some not. Anyone that says otherwise is simply lying. Zero rated items:

  • basic groceries such as milk, bread, and vegetables.
  • agricultural products such as grain, raw wool, and dried tobacco leaves.
  • most farm livestock.
  • most fishery products such as fish for human consumption.
  • prescription drugs and drug-dispensing fees.
  • medical devices such as hearing aids; heart-monitoring devices; hospital beds; breathing apparatus; asthmatic devices; prescription eyeglasses/contact lenses; artificial eyes; artificial teeth such as dentures, crowns and bridges, orthodontic appliances; aids to locomotion such as a chair, commode chair, walker, wheelchair lift or other aid to locomotion for use by an individual with a disability; patient lifters; wheelchair ramp; portable wheelchair ramp; modifying motor vehicles to adapt the vehicle for the transportation of an individual using a wheelchair; prescription orthotic and orthopaedic devices; prosthesis/devices; canes or crutches; articles for blind individuals; guide dogs for blind individuals and hearing ear dogs; supplies and services related to medical and assistive devices.
  • exports.

Now isn't it nice to see dried tobacco zero rated but not the above list. This is a tax increase on all the items listed in the so-called exempt category.

Here is a report showing how dental practices will be affected. Of course they will bury the tax and many people will believe that they are not being taxed when paying for those services when they actually are. The tax is simply included and passed on as a cost of the seller just not on your bill.

http://www.roicorp.com/articles/DPM_Summer09.pdf

Now ask yourself again how did the CCPA kiss up to Harper, Campbell and McGuinty into this massive deception on Canadians about what tax they will pay when buying so-called exempt services.

Of course this is not considering the screwing people will take on the many services they will pay full tax on for the first time. The tax grab here is massive, regressive and the propaganda deeply dishonest.

Sorry I have taken a lot of room to explain this but few people are aware of how this works-- I wonder how many here knew this.

RevolutionPlease RevolutionPlease's picture

Pretty sad it's not a bigger story.  I'm sure rabble has a copy of the bafflegab.

Sean in Ottawa

I am especially sad that people are not becoming aware of the fact that exempt means taxed just not in the final sale but buried in the cost. That would change some minds.

It is also possible that this is the Achilles heal of the bunch-- people have to get out there and talk about this.

Pogo Pogo's picture

I get your point in general, but as I look down the list I find it hard to justify in the specific

 

  • imports of zero-rated goods (goods that are specifically taxed at zero per cent in Canada, such as prescription drugs)
    • by definition will have no Canadian inputs other than distribution costs
  • goods imported by a charity or public institution that have been donated to the charity or institution
    • same as above
  • used residential housing
    • Can't comment easily
  • long-term residential accommodation (of one month or more), and residential condominium fees
  • some sales of vacant land or farmland
    • limited inputs
  • most health, medical, and dental services performed by licensed physicians or dentists for medical reasons
    • Small % of cost will be taxed - mostly labour
  • child-care services (day-care services for less than 24 hours a day) for children 14 years old and younger
    • Small % of cost will be taxed - mostly labour
  • personal-care services for children, underprivileged individuals, or individuals with disabilities, when provided by a person operating an establishment for these individuals, in either institutional or non-institutional settings
    • Small % of cost will be taxed - mostly labour
  • bridge, road, and ferry tolls (ferry tolls are taxed at zero per cent if the ferry service is to or from a place outside Canada)
    • Government costs
  • legal aid services
    • Small % of cost will be taxed - mostly labour
  • many educational services, such as courses from a vocational school that lead to a certificate or a diploma to practise a trade or a vocation; or tutoring services for an individual who takes a course approved for credit by a school authority or the education service follows a curriculum designated by a school authority
    • Small % of cost will be taxed - mostly labour
  • music lessons
    • Small % of cost will be taxed - mostly labour
  • most food or beverages sold in an elementary or secondary school cafeteria primarily to students of the school and most meal plans provided in a university or public college
    • Input (food) is tax free
  • most services provided by financial institutions such as arrangements for a loan or mortgage
    • Not sure
  • arranging for and issuing insurance policies by insurance companies, agents, and brokers
    • Small % of cost will be taxed - mostly labour
  • certain goods and services provided by non-profit organizations, governments, and other public service bodies, such as municipal transit services and standard residential services such as water distribution
    • I would assume that these organizations would qualify for GST rebates
  • most goods and services provided by charities
  • Sean in Ottawa

    Non profits do not qualify for rebates

    Some labour costs if contract are taxable

    You are forgetting rents, heating hydro most overheads

    Even the selling of  business to do any of the aboe is taxable

    You say not sure about residential rent-- think about that for a moment-- most costs will be taxable

    Pogo Pogo's picture

    Our housing co-op gets a gst rebate every year.  I was not sure what the criteria is.

    As for the other points I was not saying there was no taxable costs, but just that the amount was low compared to other expenses.

    I think it goes along a question I asked a while ago about how progressive/regressive the HST-> GST changes (in BC) are.  I couldn't find any conclusive research online, but I did find that the biggest single tax source will be revenue from real estate transactiions which undoubtledly will tax higher income households disproportionately more.

    Also I am not very sympathetic with the campaign by MacDonalds and other food service providers.  I would like to see people preparing meals and packing lunches far more.  I also find it hypocritical to say that restaurants cannot be asked to absorb a 7% tax, but then also say that we should raise the minimum wage which will raise costs as much or more.

    Bookish Agrarian

    As I pointed out before I was invloved in sectoral discussions with the government around HST implementation.  The numbers they presented us were completely out to lunch and it took our organization about 30 minutes of review to rip the numbers apart.  When we came back for the next meeting we had whittled the governments so called sectoral benefits down to about 43% of the original claim.  That 43 % was still an estimate, but it made the cost side come out higher than the so-called benefit side.

    Also as I suggested before the CCPA seems to have used the governments numbers at face value and then went on to underestimate the expense end.  From what I hear there are some serious internal issues going on over all of this- but that is just gossip and nothing you could hang a hat on.

    Sunday Hat

    ETA - oops

    Sunday Hat

    Pogo, as Bookish Agraraian notes, take "conclusive" research with a grain of salt. People like "Professor" Lightman tend to make numbers up.

    The numbers I trust are the numbers the government is eager to provide. They say the tax will save businesses in Ontario $5 billion a year. Someone has to pay for that. The money doesn't come out of thin air.

    Unless you believe that tax cuts create revenue. I guess that's what the CCPA is peddling nowadays.

    Sean in Ottawa

    Pogo wrote:

    Our housing co-op gets a gst rebate every year.  I was not sure what the criteria is.

    As for the other points I was not saying there was no taxable costs, but just that the amount was low compared to other expenses.

    I think it goes along a question I asked a while ago about how progressive/regressive the HST-> GST changes (in BC) are.  I couldn't find any conclusive research online, but I did find that the biggest single tax source will be revenue from real estate transactiions which undoubtledly will tax higher income households disproportionately more.

    Also I am not very sympathetic with the campaign by MacDonalds and other food service providers.  I would like to see people preparing meals and packing lunches far more.  I also find it hypocritical to say that restaurants cannot be asked to absorb a 7% tax, but then also say that we should raise the minimum wage which will raise costs as much or more.

    There are a number of rebates out there but they do not return the full amounts paid.

    The real estate issue, I am sorry but you are quite wrong on that. Many of the things a home-owner would do themselves are contracted services landlords will pay for. The fact they cannot recover all they pay measn there will be an increase in their costs and this creates a rationale for rent increases for sitting tenants and non-sitting tenants have an open market. I have examined the expenses of many apartment building and shudder to think of the hidden taxes that will be buried in residential rent even if it is itself exempt from tax. Condo fees will also include a lot of tax. Condos are the entry to realestate for many people who cannot afford to own freehold here is the provincial NDP release on the topic:

    https://ontariondp.com/mcguintys-hst-will-hike-condo-fees-horwath

     

    Scott Piatkowski Scott Piatkowski's picture

    I didn't find the report credible when it was first released, so I'm glad that it's been taken down. But, that doesn't explain why it was released in the first place. It wasn't good research and it was really bnad politics (one could possibly forgive the latter if it were not for the former).

    I'm a member of CCPA. I'll be asking for some answers on this.

     

    Scott Piatkowski Scott Piatkowski's picture

    Pogo wrote:
    Our housing co-op gets a gst rebate every year.  I was not sure what the criteria is.

    Housing co-ops have municipal status for the purpose of GST rebates.

    RANGER

    For how long?

     

    Scott Piatkowski Scott Piatkowski's picture

    Since the mid-1990s. It didn't make much of a difference before municipalities started getting 100% of GST back.

    Sunday Hat

    Version 3 seems to have appeared.

    Sean in Ottawa

    I reread the report-- it misses many things not just the issue of how a tax on services will affect those who provide them.

    It does not address the household utilities issue-- the more you spend on utilities the harder this tax will be because utilities represent a significant amount of the increase.

    Those who live in urban areas who pay more towards rent or housing and less towards utilities will see their housing cost jump less-- some may not even see it at all if their rent includes the utilities and the landlord does not pass that on. Those who live in expensive condos will clearly win. Those who pay for lower quality housing or rural housing but higher utilities will lose more money. There is an urban rural split at the centre of this that the CCPA ignores--

    People who live in rural communities do not have lower cost natural gas, many of the homes are older and less energy efficient and they pay more in gas to commute. Tenants who are in housing with minimum efficiency will get very badly hurt-- those who pay low rent but face leaky windows and electric baseboards are going to suffer badly as electricity is a substantially higher proportion of their housing cost. It is unbelievable that the CCPA does not recognize their situation. Among families with children who have low incomes but need a lot of space this is how they do it. Those who just managed to get a Condo will see the Condo fees raised as condos pay more in services than do home-owners as a proportion of the cost.

    Sunday Hat

    Best quote: "the paper as initially released suggested certain conclusions that do not flow from the analysis" (p 17)

     

    What a shitshow.

     

    They now say the paper "assumes implicitly that businesses will pass the bulk of these savings on to consumers" (!!)

     

    Sean in Ottawa

    Maybe the story behind this is that the methodology required to do this properly would have been too expensive and the affordable methodology makes far too many incorrect assumptions to be accurate. Sometimes it just isn't worth doing unless you do it well.

    Sunday Hat

    I think the problem is they worked backward from a conclusion.

    They decided the HST was great and set out to prove it. Reagrdless of the facts.

    Sunday Hat

    I think the problem is they worked backward from a conclusion.

    They decided the HST was great and set out to prove it. Reagrdless of the facts.

    Pogo Pogo's picture

    My comments about the Real Estate refers to fact that they estimate that 25-30 percent of the new HST revenue in BC will come from property sales.  This is limited to properties that sell for over $500K which to me says that the bulk of the tax will be paid by rich people (read Linda McQuag about hour our current tax system on property revenue is biased towards high incomes).  Based on this I find it hard to believe that the tax is regressive unless someone can back that up with some hard analysis.

    I find it remarkable how easily progressive can build up steam to fight taxes/shrink government.  Shouldn't it be a sign that the Anti-HST fight is being lead by MacDonalds and Bill Vanderzalm

    Pogo Pogo's picture

    I am not commenting on the Ontario HST as it is a totally different package.

    Fidel

    And don't forget the very riotous claim that says high consumption taxes exist in Nordic countries. And so therefore NDPers are hypocrites for opposing consumption taxes here in Canada. And so we have no alternative but to conclude that Canada's social democrats oppose social democracy. It goes without saying.

    Sunday Hat

    Even if 100 per cent of the revenue was generated from diamond sales the fact would remain that the government will generate no new revenue from this tax.

    What makes this shockingly regressive is that it's a tax shift - people pay more but the government gets none of it.

    Sean in Ottawa

    What also makes it shocking regressive is that it takes out the accountability of income tax. You know what you have paid with income tax. You also should have a reasonable report in general terms of where the money went -- I think that should arrive with your income tax package. Tax is not robbery it is for a purpose. With consumption taxes it is impossible to figure out what you have spent on them in a year.

    The government as well can shift the levers of credits and tax rates without ever compiling or providing basic accountability-- just how much are you paying?

    I am well and truly few up with people supporting a regressive tax because a bribe is tacked on. There is no reason why we could not move to a more progressive income tax system with all the accountibility it has. The only measures that are remotely progressive in this package are the compensating income tax measures as the consumption tax is resoundingly negative. Those compensatory measures can be changed at any time leaving you only the pig of an HST that is the done deal. Look at the GST itself. The credits were poorly indexed and did not keep pace while the tax collected more and more.

    As for the assumptions in the report there are many-- we don't get to see them all. We are to assume that the rich spend their money and therefore will pay more? Maybe. Maybe they won't. We are to assume they will spend it in Caanda not on a sunny island far from Canadian tax collectors? Most of the assumptions are crap. Wealthy people tend to invest to get richer. No tax there. Mid income people are the ones paying more of their paycheque to buy taxable items. The very poor often do not file returns -- they get screwed. Those who have only non-refundable credits and no refunds get screwed. In all of this the relative advantage seniors had is removed-- they get screwed. Business comes out well as does those wealthy enough that they do  not have to spend much of their income to live.

    Who will make the most? Well that might in fact be the H&R Blocks of the world -- those who provide quick refunds and tax expertise for a cut. (of course that service will be subject to the HST). Many idiots don't see that poor people cannot afford to pay extra all year to get a bigger refund from the credits-- they don't have the money-- their cost of borrowing or opportunity cost will exceed any benefit they might get even if they file their taxes and even if tax preparers and discounters don't take most of it first.

     

    Pogo Pogo's picture

    The problem is that income tax focuses on one area income.  Obviously it is the most important measure of ability to pay, but it is not the only measure.  Wealth is also a key measure that needs to be taken into account.  Having a mono-focus on income as the measure of taxability is simplistic and wrong.

    Also it is just wrongheaded to say that the tax is regressive simply because it is not under the jurisdiction of the income tax system.  The tax is regressive or progressive because of how it affects rich and poor people.

    Funny that you brought credits into the discussion as I had not brought it up.  The question I have and that no one so far is willing to broach is who pays the new tax (generally rich people? or generally low income people?).  I assume you brought this into the discussion to deflect from the fact that you are not able to address this question and specifically the point that high value real estate transactions will provide the core of the new revenue and that is almost by definition going to be paid by wealthy people.

    Pogo Pogo's picture

    The problem is that income tax focuses on one area income.  Obviously it is the most important measure of ability to pay, but it is not the only measure.  Wealth is also a key measure that needs to be taken into account.  Having a mono-focus on income as the measure of taxability is simplistic and wrong.

    Also it is just wrongheaded to say that the tax is regressive simply because it is not under the jurisdiction of the income tax system.  The tax is regressive or progressive because of how it affects rich and poor people.

    Funny that you brought credits into the discussion as I had not brought it up.  The question I have and that no one so far is willing to broach is who pays the new tax (generally rich people? or generally low income people?).  I assume you brought this into the discussion to deflect from the fact that you are not able to address this question and specifically the point that high value real estate transactions will provide the core of the new revenue and that is almost by definition going to be paid by wealthy people.

    Scott Piatkowski Scott Piatkowski's picture

    [url=http://news.gov.mb.ca/news/index.html?archive=2009-12-01&item=7326]Province of Manitoba studies HST and rejects it[/url]

     

    Quote:
    Finance Minister Rosann Wowchuk today released a report on the impact that sales tax harmonization would have on Manitoba families, businesses and public finances.  

    The report, titled Sales Tax Harmonization in Manitoba: What it would mean for households, businesses and public finances, found that implementing a harmonized sales tax (HST) in Manitoba would impose $405 million in additional sales taxes on families, increasing their share of the sales tax burden to 86 from 54 per cent.  

    "With the global recession causing so much economic uncertainty for Manitoba families, we don't think it makes sense to impose $405 million in new sales taxes," said Wowchuk. "We are not prepared to risk the economic recovery by undermining Manitoba's growing consumer confidence."

     

    This is why electing an NDP government is important.

    Lord Palmerston

    Fidel wrote:

    And don't forget the very riotous claim that says high consumption taxes exist in Nordic countries. And so therefore NDPers are hypocrites for opposing consumption taxes here in Canada. And so we have no alternative but to conclude that Canada's social democrats oppose social democracy. It goes without saying.

    Well it does make sense to understand how social democracy works in practice, doesn't it?

    The problem I have is the conflation of the HST and the attached corporate and personal income tax cuts that come with it.  Bookish Agrarian has said that since it's one package, the NDP ought to oppose it.  I see the point, and the NDP should not vote for anything that puts those tax cuts in place.  It is wrong to increase the tax burden away from business and wealthy individuals.

    That being said, that doesn't mean harmonizing the tax is inherently bad.  It's not the HST itself that is the problem.  And it doesn't mean that ordinary Ontarians are "overtaxed" (in absolute not relative terms) - that is a rightwing myth that the NDP really shouldn't embrace.

    Lord Palmerston

    Scott Piatkowski wrote:
    This is why electing an NDP government is important.

    Quote:
    “Manitoba has provided more than $400 million in tax relief for Manitoba business which will include, by the end of 2010, completely eliminating the Corporation Capital Tax for all business and making Manitoba Canada’s first income tax free zone for small business,” said Wowchuk. “Our experience has been that we can make our business taxes more competitive without imposing millions of dollars in new sales taxes on the backs of Manitoba families.”

    You're funny.
     

    Sean in Ottawa

    There are three things going on in the package:

    1) overall reduction in income taxes-- this I do not support

    2) increase in consumption taxes-- this I do not support

    3) some efforts to make income taxes slightly more progressive-- this I do support and would on its own.

    The problem is the third is the most fragile of the three measures and can be reversed by regulation. As well the third can be done without the first two -- I reject the package and consider the third to be a "ruse" to get support for a package that otherwise would be DOA. Once we swallow the package they can undo the progressivity and then bring it back again the next time they want to shove some regressive other package down our throats. That the CCPA has bought this rather than simply saying leave the consumption taxes alone and just do the progressivity changes within income tax which could be done.

    Haven't you noticed we only address progressivity when we are trying to sell something otherwise unpalatable?

    madmax

    I am awaiting a CCPA retraction. 

    I am also awaiting for the 25 in 5 retraction as their "spokeperson" also supported the HST.

    As did the Toronto Food Bank IIRC.

    Have these people lost sight of whom they are handing out food to? Or do they simply want to continue handing out more food and tell people this new tax is good for them.

     

     

    Sunday Hat

    Some additions:

    2.5) A massive decrease in consumption taxes for businesses

    2.6) A further decrease in corporate taxes

     

     

    Fidel

    Lord Palmerston wrote:

    Fidel wrote:

    And don't forget the very riotous claim that says high consumption taxes exist in Nordic countries. And so therefore NDPers are hypocrites for opposing consumption taxes here in Canada. And so we have no alternative but to conclude that Canada's social democrats oppose social democracy. It goes without saying.

    Well it does make sense to understand how social democracy works in practice, doesn't it?

    The problem I have is the conflation of the HST and the attached corporate and personal income tax cuts that come with it.  Bookish Agrarian has said that since it's one package, the NDP ought to oppose it.  I see the point, and the NDP should not vote for anything that puts those tax cuts in place.  It is wrong to increase the tax burden away from business and wealthy individuals.

    That being said, that doesn't mean harmonizing the tax is inherently bad.  It's not the HST itself that is the problem.  And it doesn't mean that ordinary Ontarians are "overtaxed" (in absolute not relative terms) - that is a rightwing myth that the NDP really shouldn't embrace.

    The problem with our rightwingers in power when the ideology fails is that they want to be Bob Rae Keynesians at the wrong times and actually doing it entirely the wrong way altogether. We've had somewhere more than $6.5 billion in wages sucked out of the economy since McGuinty was elected, and now they want to remove even more money from circulation in the economy with a combined tax. 

    Dozens of US states have done similar with refusing to raise taxes on those most able to pay them, and similar to what was done federally in Herbert Hoover's reign in the few short years after 1929. And it didn't work then as much as it isn't working today for them with 39 US states in various situations of bankruptcy and deficit spending. Ontario has a $25 billion dollar budget deficit and ideologues in government have no ideas how to get us out of this mess. I think we're looking at ten years of inaction and furhter slide into indebtedness as yet another form of massive taxpayer funded bailout for a financial system in North America that isnt working and has become parasitic of the real economy.

    Lord Palmerston

    madmax wrote:
    I am awaiting a CCPA retraction.

    You make it sound as if they did something unethical.

    Sunday Hat

    I'd say it IS unethical.

    Highly so.

    They published a paper which claimed "no one will be hurt by the HST", let it generate media all over the country, and then quietly and secretly changed it

    The conclusion now "No one will be hurt by the HST if - and only if - companies choose to pass on all of their tax breaks in the form of lower prices."

    If they had made that claim from the start the paper would have been laughed out of town. The authors were either too stupid or too dishonest to do so.

    They should - at the very least - own up to the fact that they changed their paper with as much publicity as they first launched it.

    If the Harper Conservatives had published a paper, then quietly edited it to fix their key assumptions, then pretended it was always the same (noting only in a tiny footnote that the paper had changed) I think you'd be angry.

    Pogo Pogo's picture

    Sean in Ottawa wrote:

    2) increase in consumption taxes-- this I do not support

    The argument against consumption taxes is that by design they are regressive.  This is a debateable point here (While I lean to the small group of new tax areas being in general progressive, I am not sure and could be convinced either way).  Consumption taxes are in general far better for the economy and far better for the environment.

    Consumption taxes are far better for the economy as they encourage efficiency by putting a toll on expenditures which also encourages savings.

    Consumption taxes are better for the environment as they encourage reductions in spending.  If the doom and gloom prognosticators are right are we not better off if ever second restaurant closes and people instead start cooking their own food on a regular basis?

    Sunday Hat

    I'm not sure what's being taxed in BC but in Ontario there will be a new tax on energy efficient appliances and bicycles.

    Pogo Pogo's picture

    From a previous post here is a list of the items added by the harmonization with a rudimentary analysis of how progressive the tax will be in:

     

    Restaurants - I would say that the for the lowest quintile restaurant expenditures are minimal.  While in the next 4 quintiles they rise, as a % of income it would obviously fall. 

    Entertainment - I don't really know.  You can spend an awful lot on entertainment and probably it is minimal for the bottom (2?) quintiles.

    School Supplies - obviously regressive

    Household bills - obviously regressive

    Travel - I think this is probably progressive (airline fairs and travel agency charges)

    Real Estate - There is a floor of $400,000 and a further rebate of up to $20,000 which makes this progressive in my books

    Services - The list is long and some are regressive (appliance repair) and some are probably progressive (accounting, architechture)

    Sean in Ottawa

    How can you say the lowest quintile restaurant expenses are minimal.

    I have a family -- even when money is tight things happen family things where you suddenly need to eat out-- might be something to do with school-- might be like when my father died last Spring and we could not accommodate them at our house because it is too small and a mess with roommates so we paid a restaurant. Restaurant is not always pure luxury. Even lower income people need to once in a while and it is regressive.

    Entertainment-- people spend money in order not to feel poor. Sometimes that entertainment expense is a huge expense when there is not a lot of money going around-- but you do it-- someone's birthday, graduation etc. But this is a tax that does not consider the circumstances of the person paying and has no accountability-- nobody can figure out unless they have absolutely anal accounting what they spend  in a year. You can't tart up this as progressive.

    In any case the big ticket items are the household bills-- heat, hydro etc. Those are going to hurt people and as I said they will hit rural lower income people especially hard and the CCPA did not even acknowledge that.

    As far as a retraction or unethical-- I think than is outrageous. I think they are wrong and am arguing against their paper. But to suggest that they have done something unethical is offensive. This is a good organization that has done many years of good work. They can get something wrong and we can disagree without accusing them of acting unethically. It is not unethical to be wrong. Besides, as much as I think I am right-- they have a right to thin I am wrong and they are right. We use logic to argue not insults. I am sorry but I have seen too much benefit to Canada and lower income Canadians come out of this organization to suggest that this is anything other than a mistake-- a bad one perhaps, but just a mistake. I still support the work of the CCPA generally even as I strongly disagree with this report. They are, after all, our allies.

    Pogo Pogo's picture

    I agree people on low income spend money on restaurant food and entertainment.  That isn't the point.  The issue is that they don't spend as high of a percentage of their income.  Yes someone might have a bad week and treat themselves to Pizza on Friday instead of cooking a meal but that is dwarfed in comparison to the quantity and value of the meals consumed by the rich.  For example the Edmonton Oilers were charged $17K for their New Year's Eve restaurant meal.  That may be an extreme example, but the math is simple.  The richer you are the more disposable income you have both in simple dollars and as a % of their total income.  Their choice to pay more for food is easy and often justified (love to see an NHL player making sandwiches at their kitchenette).

    Entertainment is similiar.  Yes everyone goes to movies (though not everyone buys the $4 pop).  But compare that to the money spent on a ski weekend.  The government of BC gets $1 billion dollars in tax revenue from Whistler because rich people are spending fortunes on their entertainment.

    Lord Palmerston

    I urge anyone who is seriously interested in this topic to try to get hold of the Fair Tax Commission studies from the early 90s. 

    Pogo Pogo's picture

    Scott Piatkowski wrote:

    Pogo wrote:
    Our housing co-op gets a gst rebate every year.  I was not sure what the criteria is.

    Housing co-ops have municipal status for the purpose of GST rebates.

      I was on our co-ops board when this happened and I understood that it was extended to a number of institutions not just co-ops.

    edit to add info from CRA website:

    Municipalities that are eligible to claim the 100 per cent GST and the federal portion of the HST rebate include:

    • incorporated municipal bodies, such as cities, towns, villages, and metropolitan areas;
    • entities determined by the Minister of National Revenue to be a municipality, such as transit commissions and public libraries; and
    • entities designated by the Minister of National Revenue, in respect of their delivery of municipal services, such as some non-profit social housing corporations or cooperatives.

    Olly

    The CCPA took it down because NDP party hacks were pissed off that objective analysis contradicted their politically motivated but strategically stupid position on it. 

    madmax

    Lord Palmerston wrote:

    madmax wrote:
    I am awaiting a CCPA retraction.

    You make it sound as if they did something unethical.

    "I am awaiting a CCPA retraction"

    6 words and you make the assumption, not me.

    "I am awaiting a retraction".  That's all.

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