TAX NEWS - 2010

Canada Tax: McGuinty's bad medicine on the HST

Premier Dalton McGuinty sounded uncharacteristically weary this week as he once again launched a defence of the Harmonized Sales Tax.

"This is the 453rd day of debate and discussion -- since we introduced the HST in the March 2009 budget," he told reporters on Tuesday.

He added that since then, the opposition has asked 300 questions in the legislature.

The big question for the Liberals is this: Is this the beginning of the end? Or the end of the beginning?

Will consumers suck up the tax hike the way the government hopes they will? Will they buy the line that blending the GST and the PST is key to economic regeneration? That 600,000 jobs are in the balance?

Or will even more weary taxpayers point to the same number of manufacturing jobs that have been lost in the last five years and figure out the economic recovery that's happening anyway will surely bring at least that number back.

The Liberals argue this is a consumption tax. The people who can afford the goods and services pay more.

McGuinty starred in a folksy, down-home type television ad this week, that featured him telling us the HST is basically the Buckley's cough mix of taxes.

It tastes terrible, but it's good for you.

He wants us to know 83% of purchases are not affected by the tax.

"I know this is strong medicine but it is really important for us to do this and we can together build a strong economy," he told reporters.

Critics are dubious.

Included in those items are commodities vital to life in this province.

The costs of home heating and gasoline are affected. While northerners will get a credit to help pay for their longer heating season, the HST is going to push electricity costs -- which are already soaring -- even higher.

It could well be that the cost of electricity and not the HST becomes a key election issue next year. The Liberals are already highly vulnerable on it. Most industry insiders expect the cost of hydro to skyrocket by as much as 40% by next fall.

Gasoline will also go up. You'll soon be paying an additional 8% in PST, on top of the 14.7% provincial gasoline tax and on top of the 5% GST.

So while 83% of items are not affected by the tax, when the 17% that are include items families need to heat their homes and to get to work, it hurts.

Still, there were massive screams of outrage when the Liberals brought in their health levy in their first budget.

It didn't hurt them in the polls.

In B.C., meanwhile, the move to harmonize the taxes has led to a revolt -- and the resignation of a cabinet minister.

Former B.C. premier Bill Vander Zalm has led a highly successful campaign to block the tax and more than 600,000 people have signed a petition opposed to it.

In this province, there are sporadic complaints, but no organized campaign against the tax. You have to wonder, were McGuinty and his backroom strategists simply better at selling the tax than Gordon Campbell's in B.C.? Or are we simply tax sheep -- following our government blindly wherever they may take us?

Will sticker shock drive us to action next week?

It will be too little too late.

July 1 is the end of the end for taxpayers. Here's your bill. There's your tax. Now cough up.

Can someone pass the Buckley's?