Policy Alternatives report on HST - vanished?

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madmax

Olly wrote:

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. 

Any proof of that? Or could it be that many supporters of the CCPA did a double take when they read the article and saw the report.  The report regardless of outcome was pretty lame to begin with. Garbage in, Garbage out. 

Olly

Why was the report lame? Ernie Lightman is not an easy guy to convince. I guarantee he went into the analysis wanting to poke holes in the HST. What he found out through analysis is that low-income Ontarians fare better under the HST because of the tax credits (he didn't look at BC). He also found that the HST changes on their own make the tax system more progressive. It's an inconvenient fact for the NDP. And yeah, CCPA members probably did a double take, because CCPA members are NDP members and don't like inconvenient facts to get in the way of political positions.

Michelle

madmax wrote:

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.

Excellent post.  And good questions.

Olly

Since low-income Ontarians are better off with the HST it makes sense to me that 25 in 5 and Toronto's Food Bank would support it, since they both support low-income Ontarians having more money.

Michelle

It's clear that at least the CCPA was willing to support the HST if their research backed up such support.  They weren't just supporting it because they're Liberal hacks, or organizations who stand to gain from people staying poor and in need of charity.  It sounds like once they realized their conclusions were based on shaky or even downright wrong premises, they changed it.

Now, I think there's a good discussion to be had about whether they should have attempted to publicize their new conclusion as much as they did the old one.  But either way, it's clear they were willing to publish a point of view that was contrary to that of the NDP originally.  If the organization really was just a bunch of NDP hacks, they'd never have published the original article in the first place.

Olly

The new piece still draws the same conclusions about the impact on low-income Ontarians.

Sean in Ottawa

Olly history has shown that they are not.

The measures that suggest they are are debatable and do not come from the HST but income tax measures attached to it that historically get reversed by regulation or rendered weaker by improper indexing. The HST is bad without doubt. Up for debate is whether the sugar mixed with this poison is sweet enough for people to swallow.

The other problem is that the measurement of these incentives are based on many assumptions that cannot be verified-- will lower income people who are below the cut-off actually file taxes now to get these "benefits" and can they do so without paying whatever benefit they do get to tax preparers? Do people actually spend money the way the assumptions are crafted? Will basic necessities that are taxed go up more than those items that are not-- heat and electricity-- experience suggests they will.

And all of this is to support a bad tax. All the progressivity measures being given to us as sugar can be done anyway. There is no prerequisite to have a bad consumption tax in order to bring in the measure announced-- those shifts could have been accomplished within the income tax rates-- increase the top rate a little -- decrease the bottom.

Olly, it is your response and baseless accusations that are politically motivated not the opposition to this tax.

Michelle

Well then what are you whining about, Olly, with regards to the CCPA being full of NDP hacks?

Olly

Sean, if you are a manufacturer in Ontario, you are paying taxes on every input in the production process. This is not the case for manufacturers in Quebec, in the Maritime provinces, and in the United States where most of Ontario's manufactured goods are sold. This makes Ontario's manufactured goods more expensive against those produced in the US and almost anywhere else in Canada. That's what makes the HST good public policy, as it ends that problem. If I'm an assembly line worker in Oshawa or Windsor I would be pretty happy about anything that makes the goods they produce more competitive. It has the side effect of increasing consumption taxes, yes. The question is whether the tax credits are big enough to offset the increase in consumption taxes for lower income people. Ernie Lightman's report says they do. I'm happy with that.

Sean in Ottawa

Olly wrote:

The new piece still draws the same conclusions about the impact on low-income Ontarians.

And it is still wrong and it is still based on shoddy assumptions many of which are not even clearly stated.

It fails to account for rural realities just for one. It acknowledges some limitations and then optimistically papers over them. It ignores the nature of tax credits and the political context that makes it harder to change a tax but easy to regig the numbers so this measure puts the hard stuff out as firm but the better provisions very fragile.

Still, if you refuse to engage the logic and just repeat mindless, baseless allegations it won't be worth debating the facts of the proposal. I think you will find that while I support the NDP I am nto a hack and have no trouble disagreeing with NDP positions or any other based on substance. I take offence that you say that all those agaisnt the tax are just people with an agenda other than opposition of susbstance. How arrogant that position is! I don't know you but I hope that it is beneath you and you will return to this debate arguing matters of substance rather than political rhetoric. I have spent a lot of my life trying to help vulnerable people and I support the NDP as a means to that end not the reverse and I would never sell out the interest of vulnerable people to support what is to me just a political means to helping them. Please review your attitude to many people here who have put in hard work over the years to help real people.

Olly

I'll add that I think the HST is bad politics because it is being perceived as a tax hike. The McGuinty government may die on this issue. The Ontario NDP though is just playing into the right wing agenda to oppose any tax. The only beneficiary of what the NDP is doing is Tim Hudak.

Sean in Ottawa

Your first statement is false-- most inputs in the production process are sold wholesale-- the PST is a retail tax. Very, very few items are purchased retail to go in to a process to sell again. Those who buy retail as a process of addign value to goods for resale tend to be the smallest businesses who are not likely to be registered and will only have that problem compounded by the added service taxes. You should spend more time looking in to Ontario's manufacturing woes because if you think it is due to provincial tax then you will have a nasty surprise.

We are debating Lightman's report based on specific problems with it -- you are blindly accepting it while insulting people who are coming out with specific problems with it-- which position is more credible?

Olly

From TD Economics

 

"Now imagine the amount of tax cascading that goes on in manufacturing - an industry which has multiple stages of production. The manufacturing of a tire alone has up to 8 stages. Depending on whether these stages are done in-house or contracted out, there is the potential to have the RST cascading through all 8 stages, before the tire is taxed one last time as part of the final purchase of a motor vehicle. Moreover each stage uses inputs likely purchased from an outside supplier such as, bolts, and office equipment."

Sean in Ottawa

And all purchased wholesale. I have worked in business long enough to know that manufacturers do not buy retail.

PST is not applied to wholesale transactions. Check it out--

Sean in Ottawa

Exempt from PST: "Taxable goods and certain taxable services purchased by vendors or wholesalers for resale to others."

http://www.rev.gov.on.ca/en/guides/rst/204.html

Please do more research before you insult others and accuse them of being hacks-- Google is your friend.

Sean in Ottawa

Also reread your TD quote "there is the potential for" -- liars words-- they know better but are selling this tax because it will shift more taxation to consumers. They also know that it is a theory only and that in practice since you can get an exemption certificate for wholesale transactions nobody would fail to do it for any significant transactions.

Furthermore, there are three ways wholesalers can get out of paying the retail tax-- the first is to buy from wholesalers who only sell to wholesale purchasers and never charge PST

The second is to file an exemption certificate at the time of sale-- this is done for larger transactions that are missed int he first.

The third is done through a refund application process done at the end of the year.

Very, very, very little PST is ever included in a wholesale transaction in the final analysis and TD well knows this.

madmax

Olly wrote:

Sean, if you are a manufacturer in Ontario, you are paying taxes on every input in the production process.

Stop right there. You have no idea what you are talking about and have stepped out of your league. You are giving Sean incorrect input yourself. 

Do not use this HST  as some saviour for manufacturing.

madmax

LOL, I should know better. Seans on top of everything as usual.

Lola 101

Michelle wrote:

madmax wrote:

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.

Excellent post.  And good questions.

Are they good questions?  Based on what?  Can you point us to when and where a 25 in 5 "spokesperson" expressed support for the HST?  Their submission on the HST certainly does not do that.  Neither does the media coverage. It does outline specific points for making sure the tax package does not hurt lower income people.  And also calls for action to increase our fiscal capacity to pay for public goods and avoid reducing corporate and income taxes across the board.  What it certainly does not do is play into the hands of the "any tax is a bad tax" forces. 

Scott Piatkowski Scott Piatkowski's picture

No, what it does it refute the claims of those who think that the NDP never met a tax that it didn't like. This tax is a bad tax and that's why it should be opposed.

Bookish Agrarian

Olly wrote:

Sean, if you are a manufacturer in Ontario, you are paying taxes on every input in the production process. This is not the case for manufacturers in Quebec, in the Maritime provinces, and in the United States where most of Ontario's manufactured goods are sold. This makes Ontario's manufactured goods more expensive against those produced in the US and almost anywhere else in Canada. That's what makes the HST good public policy, as it ends that problem. If I'm an assembly line worker in Oshawa or Windsor I would be pretty happy about anything that makes the goods they produce more competitive. It has the side effect of increasing consumption taxes, yes. The question is whether the tax credits are big enough to offset the increase in consumption taxes for lower income people. Ernie Lightman's report says they do. I'm happy with that.

Sean has already ably blown this falsehood apart, however I just want to add some verification.

As I have pointed out I was a sectoral representative to Finance Ministry discussion on HST implementation.  I think that gives me a smidge of grounding on the details of this particular tax package.

Currently manufacturers, and other registered businesses, can claim an exemption for products used soley for business purchases- even if bought retail.  As Sean points out though few large, or even medium sized businesses purchase retail - they buy wholesale where there is a blanket exemption.  But even the smallest businesses now can be exempted from PST.  All the government did was expand the definition of what can be considered 'business' use.  So there is some small savings for all businesses there, but it is not going to 'save' manufacturing, or even keep the doors open on a struggling business.  This change is really a loss-leader anyway, as most sensible accountants would have simply added in the cost of the PST to those purchases outside the already significant exemptions when doing taxation calculations.

Where business really will clean up, and this is for the largest, most profitable businesses, not your local Mom and Pop small businesses is in the rather large corporate tax cuts coming in.  Tax cuts without a single string attached. 

And guess who will be paying for those larger CEO salaries - it will average people every time they fill up their vehicles when they go to work, or when they try to keep their drafty apartments warm on a blustery night, or every time they sign their kids up for hockey.  This tax package is about as regressive as they come.  It isn't about theory of one type of taxation method over another it is about the very regressive reality of this particular package.

 

Everyone makes mistakes if they are human and in this case the CCPA made a dosey.  That doesn't mean they don't do good work, but to remain crediable they should own up on having done a boner.

Michelle

Thanks for posting that, Lola 101.  I took the post at face value.  I checked out the submission, and it looks like they're not really opposed to it - they're offering advice on actions to take alongside it, from my quick scan of it.  But I agree, that's different than "supporting the HST".

It would be interesting to see what the take of other charities that cater to impoverished people is on this issue.

Thanks for pointing that out, Lola.

 

madmax

Quote:
Poverty advocate backs blended tax with supports,...
Poverty advocates say they're not against the merged sales tax as long as it comes with the right conditions to help the province's poorest residents.

Greg deGroot Maggetti of the 25 in 5 Network for Poverty Reduction says taxes are important to fund public services, which are key at a time of recession

 

Of course taxes are important.

 

You either support this tax or you don't. 25 n 5 have indicated that they are not opposed to the HST. Everyone has a "wishlist", so does Tim Hudak.

 

 

 

Sunday Hat

Olly wrote:

From TD Economics

 

"Now imagine the amount of tax cascading that goes on in manufacturing - an industry which has multiple stages of production. The manufacturing of a tire alone has up to 8 stages. Depending on whether these stages are done in-house or contracted out, there is the potential to have the RST cascading through all 8 stages, before the tire is taxed one last time as part of the final purchase of a motor vehicle. Moreover each stage uses inputs likely purchased from an outside supplier such as, bolts, and office equipment."

Manitoba Governemnt's Report on HST:

"A key conclusion of this analysis is that, although the impact on business varies greatly by sector, harmonization can have some positive overall benefits for the economy, particularly for exporters. However, the analysis finds that the competitiveness gains, particularly for those sectors exposed to export competition, are very modest."

 

The benefits to business are debatable.

thanks

I am fortunate to have someone to help with my tax return each year.  Many people, even without limitations, cannot figure out or disentangle the tax bafflegab and line items, and flyers announcing new programs whenever some politican makes changes.

I'd have missed some of the credits that are suppose to 'compensate' for the HST, if someone wasn't helping me at tax time.  As it was, a whole lot of paperwork was required to get those credits.  I can't see many people with disabilities doing all that.  Was this aspect mentioned the foodbank or other poverty-advocate responses?

Further, for some reason the credits never seem to keep up with increasing costs of living, costs added to with consumption taxes, especially on necessary services and food.  Everytime some pundit says a carbon tax or a consumption tax is fine as long as low income people are given cash back, i just roll my eyes.  it never happens sufficiently.  That's the reality. [ps. why is it so difficult for environmental folks to simply demand caps on pollution?  No trade.  Moratoriums not markets.]

And where is the tax on wealth, on all those CEO's and bankers and corporate moguls?  The joke is there is no public accounting on  all their dollars, so they aren't even taxed.  They also get scads of loopholes and deferments that their lawyers can find, create, or exploit in tax law.  Meanwhile low income people are monitored and audited within an inch of their lives and taxed on survival costs.

Harperite tax cuts to the rich are wrong.  Cross-the-board consumption taxes that require all kinds of fancy footwork by vulnerable people with little time or capacity to get what's coming to them, or middle income people who have to work, look after kids, and eat on the run, are wrong too.

Allowing wealthy people to get bailouts with taxpayer money, and sock it away tax-free, is wrong.  Allowing financiers to escape scrutiny with privacy law on their speculative and other investments is wrong.

Progressive economists need to deal with the forest and the trees of tax policy.  Reports with side-blinders are regressive.

George Victor

Excellent post, thanks!

RANGER

A keeper that in particular the Joe Average types across the land would appreciate! thanks, Thanks. 

Sean in Ottawa

Exactly-- this tax proposal takes cash, on one hand, and gives credits on the other the proper analogy is that it takes money out of your pocket in exchange for a mail-in rebate.

'Most people do not respect the mail in rebates-- one hoop not gone through and you don't get it but we see them everywhere because it is the loophole that allows the retailler to advertise a lower price knowing a lot of poeple who qualify for the mail-in will never get it. The anology still holds true here- governments get to say people are compensated knowing that a lot of them worth a lot of money to the government won't be able, or forget, or make a mistake or miss somethig in the fine print the the government will blame them and pocket the difference just like a mail in rebate with complicated instructions designed to foil enough people to get away with a higher price than advertised.

 

Sunday Hat

Olly wrote:

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. 

And, presumably, these same NDP hacks somehow forced them to get the numbers and conclusions wrong?

Frustrated Mess Frustrated Mess's picture

thanks wrote:

Further, for some reason the credits never seem to keep up with increasing costs of living, costs added to with consumption taxes, especially on necessary services and food.  Everytime some pundit says a carbon tax or a consumption tax is fine as long as low income people are given cash back, i just roll my eyes.  it never happens sufficiently.  That's the reality. [ps. why is it so difficult for environmental folks to simply demand caps on pollution?  No trade.  Moratoriums not markets.]

Exactly. And the other side of that coin is that when you pay a consumption tax the money must come out of your pockey RIGHT NOW! You can't defer payment of heating, say, until after you file your tax return and receive your rebate.

As for your P.S., environmentalists are like everyone else. They get caught up in the debate and often don't question the premise or the framing. This environmentalist, your's truly, has argued over and over again that cap'n'trade, carbon taxes, and other such schemes are really intended at establishing bureacracies and processes while allowing business to continue as usual. Yes, the obvious and simplest solution is regulation and prohibition of activities that pollute and hard caps on carbon, no exceptions.

Sean in Ottawa

There are also carrot options as well as stick options when it comes to the environment- there are investments government can make in new technologies and practices-- this is not to diminish the regulation, prohibition and caps. I also would not take tax off the table either. While some activities and products ought to be prohibited, others can be taxed to discourage use and reset more realistic costs.

I think a mix of all these policies must be undertaken together with much more steeply progressive income tax-- this is important as certain activities and products that are not luxury will go up and that must be addressed. On the whole I would be against wide flat carbon taxes based on percentages because they punish more than move habits. However, when a more environmental option becomes available then aggressive taxation should be used along with regulation and prohibition in extreme cases. New cars, for example, can be sorted in to efficiency ratings with the worst being prohibited, the second worst heavily taxed the middle be moderately taxed and the more efficient options not taxed. This should be done based considering affordability so that of the nontaxed group there be something affordable.

 

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