TAX NEWS - JUNE 2010

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Ontario Tax: Ontario finance minister challenges opposition to repeal HST if elected

OTTAWA — As the start date for the HST in Ontario approaches, the political jousting among the political parties is taking on a more serious tone.

On Monday, Ontario Finance Minister Dwight Duncan challenged the Conservative opposition to promise to repeal the Harmonized Sales Tax should they win the next provincial election in November 2011.

Duncan was in Ottawa promoting the merger of the Goods and Services Tax (GST) and Provincial Sales Tax (PST) which takes effect July 1.

He says the Tories haven't promised to kill the HST because the party secretly believes the new tax is good policy.

"This is absolutely the right thing to do," said Duncan.

Duncan said wiping out the tax within its first five years of implementation would force the province to repay the $4.3 billion payment it is receiving from the federal government to implement the tax. However, with an annual provincial budget of more than $100 billion, Duncan said a repayment is feasible.

"It would be over two years, so that would be less than two per cent of the budget," he said. "They can pay it back."

Tory Leader Tim Hudak was unavailable Monday afternoon, however Nepean-Carleton MPP Lisa MacLeod, the party's HST critic, called Duncan's remarks "irresponsible."

"It's pretty rich of Dwight Duncan to sit there and say that $4.3 billion is basically a drop in the bucket," she said. "It's laughable. You look at it with the backdrop of a $21 billion deficit and you wonder what planet they are on."

MacLeod said the Tories have not ruled out cancelling the HST. The party is still weighing its options about how to best address the new tax heading into the 2011 provincial election, she said.

Duncan said the tax has the support of the federal Conservatives. It is also endorsed in a 2006 Fraser Institute report called Building Prosperity in a Canada Strong and Free co-written by former Ontario Conservative premier Mike Harris and former Reform leader Preston Manning.

"The five provinces that still apply sales taxes to business inputs, namely British Columbia, Saskatchewan, Manitoba, Ontario and Prince Edward Island, should immediately end this practice," reads the report on page 49. "These provinces are further encouraged to harmonize their provincial sales taxes with the federal goods and services tax, which already exempts business inputs."

A poll conducted for the Canwest News Service by Ipsos Reid in December, found that 74 per cent of Ontarians oppose the HST.

Duncan said that since the HST was introduced by the Liberal government last summer there have been five provincial by-elections, including one in Ottawa South, and the Liberals have won four.

"We are going on the offensive," said Duncan. "It's a tough policy … we want to set the record straight."

He says, while the HST will add costs to some items, once all of the tax cuts offered in the 2010 budget are taken into account the overall tax burden of a vast majority of Ontarians will drop this year.
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