National Affairs

2009-04-09 / Columns

All it means is higher taxes - period
Claire Hoy

The late U.S. senator Daniel Patrick Moynihan once quipped that "Everyone is entitled to their own opinion, but not their own facts." And so it was on March 10 that Ontario Premier Dalton McGuinty offered his opinion to the provincial Liberal caucus that nothing had been decided on the thorny - and tax-raising - issue of harmonizing our eight-percent provincial sales tax (PST) with Ottawa's five-percent general sales tax (GST).

He lied. Even as he stood before his own party MPPs to say he wanted to hear what they thought of harmonizing the two taxes, McGuinty and Finance Minister Dwight Duncan had already signed a secret memorandum of understanding a day earlier in a meeting with federal Finance Minister Jim Flaherty.

And on the very day McGuinty said the issue was still up in the air, he and Duncan had actually signed the deal, accepting a promise from Flaherty for $4.3 billion by way of compensation to help smooth the transition.

This is the same man, let us never forget, who during his first successful run for the premiership, publicly signed a pledge that he would not raise taxes, only to immediately announce a health premium, one of the largest single tax increases in Ontario history.

He lied to all the voters then. He lied to his own caucus last month. And now we're stuck with the bill.

Besides demonstrating once again that McGuinty cannot be trusted to keep his word, what does all this tax harmonization mean to you, Mr. and Mrs. Beleaguered Taxpayer?

Higher taxes. Period.

Now, instead of enjoying PST-free purchases on several consumer items, you'll now be paying the full 13 percent on the vast majority of your purchases. Things such as books, car repairs, diapers, children's clothing and footwear, children's car seats and feminine hygiene products, which had been exempt from the PST, will now be taxed when it kicks in July 1 this year.

So too will gas, fuels and electricity - all previously exempt - along with the costs of conferences and seminars, prepared foods under $4, tobacco (along with nicotine replacement therapy), and the tax will be added to the bill for professional services from lawyers, accountants and architects, et al.

Even getting a hair cuts will cost you more in taxes, along with membership fees in gyms and fitness clubs, as well as your daily newspapers and magazines, taxi and limousine fares, internet access fees, golfer's green fees, and live theatre admissions.

They'll even slap the full tax on your vitamin pills and - if you can believe it - the legally blind will now have to pay the full tax on their audio books. Sweet, eh?

And at a time where the economic situation is already critical - with hundreds of thousands of Ontarians losing their jobs (although none who work for the government, alas) - McGuinty has tacked the tax onto the purchase of homes worth $500,000 or more. Now you might think that's a pretty swanky home. And it is in many parts of Ontario. But for those taxpayers living in the larger cities, particularly Toronto and environs, it will add 10s of thousands of dollars to the purchase price and further deflate an already-struggling real estate market.

To ease the pain of transition - or, to buy off the immediate anger from taxpayers - McGuinty's budget includes transition payments of $1,000 to families with incomes of $160,000 or less and $300 to singles with incomes of $80,000 or less - with two installments in 2010 and a third in 2011. But after that, the handout is gone and you'll be left to pay the higher taxes for the foreseeable future.

To be fair, the budget did include some modest tax cuts, but overall - and despite spurious claims to the contrary - most of you will end up paying more in taxes, even as you see your current earning power and savings erode.

The government says the tax moves will save business about $500 million a year in taxes. Perhaps. But the more likely scenario, as Judith Andrew of the Canadian Federation of Independent Business told reporters last week, is that "It means higher prices ... There are clearly some sectors that are going to have trouble with this."

Which is why, no doubt, McGuinty didn't want to come clean with his intentions and give the public - not to mention his own caucus - a chance to debate it.

That's far too democratic for his tastes. He'd rather tell us one thing and do another.

But then, despite his slippery tongue, voters did re-elect the guy. We can thank John Tory for that. Geez!

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