Ignatieff announced today that his party would be supporting the HST. This may come as a surprise to the public, as Ignatieff himself labeled the tax grab the Harper Sales Tax. Instead, Ignatieff is now talking of a demand from the provinces based on the supposition that the HST will increase the competitiveness of businesses and create more jobs. This supposition, which I, though not an economics student as of yet, doubt very much, has led Ignatieff to a callous position on the HST.
While the supposition that the HST will lead to more jobs may or may not be theoretical, there is nothing theoretical about the toll the expanded tax will have on ordinary Canadians. This is because the HST is not only a harmonization of the taxes. If it were, Ignatieff's position would be justified. It is also an expansion of the GST and PST, applying consumer taxes of 12% to items previously exempt from any tax.
As it is, the HST expands a regressive tax on items every Canadian needs to buy. Canadians need to buy groceries and such items in equal amounts. So while the amount of money they spend on their groceries may vary due to the quality of food, this amount will still be close in total terms. However, in proportionate terms, this is far from the case.
A higher proportion of lower class incomes goes towards items that will be newly taxed by the HST, while a lower proportion of upper class incomes goes towards these expenses. Therefore, the HST will affect the poorest Canadians the most.
Surely this is not what Ignatieff wants?
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