Posted: September 8, 2017 at 8:52 am   /   by   /   comments (0)

Your Comment piece from last week entertained a debate on the relative merits of hiking a provincial regressive flat tax—the provincial portion of the HST from 8 per cent to 9 per cent.

In my view, informed and fair debate on a public question is, generally speaking, a sound test of the intellectual vitality of a community and the robustness of its public agora.

Notwithstanding the fact that a true debate also requires the regulation of equal time, equal space, and procedural rules—none of which inhabit this exchange—let’s cut to the chase.

My starting point quotes your own words: “It’s true. VAT taxes (like the HST) are… regressive. Goods and services taxes are levied on the things we buy, so proportionately, poorer families use a greater portion of their income consuming the basics of life than do richer families.”

The remainder of your case for making the poor pay seems to approach a form of economic eugenics—the wealthy and well-born get to benefit and call the shots.

Nobody is going after Grandma’s savings as you allude, but if ScotiaBank is able to spend $800 million to rename the Air Canada Centre, well, perhaps they’re richer than we think!

And your (to me) glib slight of “the column of consumers filing out of Costco with oversized carts bulging…” doesn’t seem to jive with the reality that a recent outburst of consumer spending just propelled Canada’s economy to its strongest quarter in six years.

And yes, there are options—including a net wealth levy on the very rich, which the very rich can mitigate should they invest in job-creation.

In my opinion, AMO has done what Premier Wynne herself scrambled to do with her politically expedient HST rebate on residential electricity costs (which also delivers bigger savings to the rich while the smallest savings go to our poorest households)—leap for the opportunistic, quick fix.

Our serious rural infrastructure needs require a structural solution that maximizes the fiscal flexibility and autonomous decision-making capacity of municipalities like ours.

Overall, we need $4.9 billion a year to address Ontario’s municipal infrastructure needs.

But when it comes to education, a constitutionally enshrined provincial jurisdiction, the municipal education property tax alone is $6 billion.

In addition, I’m willing to contend that Canadian businesses are increasingly more sensitive to demand-side considerations (namely the global market for their products) than to supply-side considerations (such as taxes) when making domestic investment decisions.

And on the key point, hiking the HST (without countervailing measures like a guaranteed basic income) does nothing but exacerbate the widening tax burden between families and the poor versus corporations and the wealthy.

All of this said, I concede that value-added sales taxes (VATs) like the HST are economically efficient.

However, to make such a hike fair and effective would require an as yet unknown yet meaningful Robin Hood fix.

Absent that, I can not support an HST tax hike that further exacerbates trends undermining progressive, fair taxation for the past decade.

Those trends are twofold: a shift in federal and provincial government revenues from corporations to households; and, at the household level, a shift from progressive income taxes to regressive consumption taxes like the HST, such that upper-income households have seen a much larger drop in taxes paid.