The ‘bait and switch’ of harmonized taxes

Missed opportunities abound in this year’s budget.

Despite hundreds of names on petitions, letters to the Finance Minister, requests from auto dealers and news conferences, we failed to convince Mr. McGuinty to allow a sales tax holiday on new vehicles sales. By lending a hand to struggling auto dealers, this economic stimulus could have boosted the parts industry, auto assembly and steel production.

A sales tax holiday was not the only omission – a quick glance at the budget reveals no news for farming, forestry, mining, manufacturing, steel or those who have been kicked to the unemployment line. In his budget speech, the Finance Minister crowed about corporate tax cuts; however, this budget contains nothing. The corporate cuts mentioned in the budget speech do not take effect until July 1, 2010. So, we will hear them re-announced in the budget next year.

Mr. McGuinty has also secured his place in the record books, by creating the largest deficit in the Ontario’s history -- $14.1 billion, with another seven years of deficits projected. Since elected, the present government has doubled the debt.

Most discussed is the introduction of a Harmonized Sales Tax (HST). It appears the McGuinty government has enacted the old ‘bait and switch’ to divert taxpayers’ attention from the real issue – our tanking economy. The mainstream media is focusing on the HST, so it would seem this communications strategy has been successful.

While this so-called economic measure is meant to alleviate strain on businesses, I can say the bulk of the complaints to my office to date are from business owners. They understand that the harmonized tax may spook consumers to postpone purchases, in particular, big-ticket items, or not purchase at all.

Plain and simple, we have another tax grab that will pinch the wallet of everyone every time they buy something. And don’t forget, we are all still paying upwards of $900 a year for the so-called health tax.

In an attempt to soften the blow of the harmonized tax, Mr. McGuinty has pledged to forward – in three payments – $1,000 to households who earn less than $160,000 annually. This is sugar chasing poison – taking money from one hand and putting some of it in the other. Ironically, the third and final cheque will go out just before the next provincial election in 2011. After that – we’re on our own to continue paying the additional eight per cent tax, with no more handouts.

Why would Mr. McGuinty choose to shift the tax burden from businesses to consumers, at a time when people are losing their jobs? What Ontario businesses and consumers need at this time are tax cuts -- not hikes.

According to the Building Industry and Land Development Association, the harmonization of taxes will add nearly $47,000 to the price of a new home in the Greater Toronto Area, and about $23,000 to a home in Haldimand-Norfolk and the rest of the province.

Also, we will pay more every time we fill up our tank – eight per cent.  We will pay more for home heating fuel.  We will pay more for cable, internet and cell phone service.  We will pay more if we need a lawyer to close a home purchase or sale.

This budget has officially confirmed Ontario’s continued course of enhanced taxing and spending and borrowing.