Tuesday, December 1, 2009

Why Ignatieff's Position on HST is Wrong

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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  1. I stopped reading when you wrote you support harmonization but this is an expansion of the GST. It is not. No items exempt from GST now will be subject to the HST. And you are also opposed to expanding the PST. Well how the heck are you going to harmonize the PST with the GST then?

  2. I think recent event just show that the Ignatieff team has no idea what they are doing and they don't really want to win back government. I think the Harper government is corrupt, incompetent and pathetic. But they are only out-matched by the Ignatieff Liberals.. Everytime they have a wedge issue they just throw it away. They think they can play nice against a government that obeys none of the rules of decency or fair-play.


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