Droppin’ some HST

The province-wide revolt over BC’s looming Harmonized Sales Tax is reminiscent of protests a generation ago when the HST’s federal parent, the Goods and Services Tax, was born. The rationale for that shift was similar to that of the HST: to switch from an invisible tax paid by producers (the Manufacturers’ Sales Tax) that was passed on to consumers to […]

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Harmonization’s False Premise

Advocates of harmonizing provincial sales taxes with the federal GST almost always argue from the premise that, whereas the GST only covers consumer purchases, provincial sales taxes apply to all business inputs. Harmonization is then presented as a means of removing the sales tax from business purchases of machinery and equipment to promote new investment. Not surprisingly, provincial governments have […]

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BC and the HST [updated]

In its first major economic policy announcement, the freshly re-elected BC Liberal government announced that it would be harmonizing the 7% Provincial Sales Tax (PST) with the 5% federal GST, as of July 1, 2010. What is striking about the new Harmonized Sales Tax (HST) of 12% is that it did not feature in the recent BC election in any […]

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Ontario Budget Notes

Last week’s Ontario budget was quite momentous and challenging to digest. Budget analysis was initially overtaken by the Premier’s minimum-wage musings. The budget featured a combination of large expenditure increases and large revenue reductions. Overall, I think that it embodies the proposal from bank economists for temporary spending and permanent tax cuts. While it provides proportionally more short-term stimulus than the […]

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Fiscal Cost of PST Harmonization

Amid speculation that the Government of Ontario may harmonize its provincial sales tax with the GST, today’s Toronto Star reports, “The government has offered no analysis to determine how much of a benefit or a drain harmonization would be on the provincial treasury.” I have seen at least one estimate from outside government. Michael Smart and Richard Bird wrote a […]

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Harmonizing Sales Taxes: The Spending Power in Action

Three weeks ago, I wrote, “Budget 2007 used the federal spending power quite aggressively to pay provincial governments to eliminate their Corporate Capital Taxes. A similar use of the power will be needed if the Conservatives are serious about harmonizing provincial sales taxes with the GST.” The front page of Friday’s National Post reported, “The Conservatives will encourage the five […]

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