The latest McGuinty government budget has drawn the ire of Dufferin- Caledon MPP Sylvia Jones, an outspoken opponent of the proposed Harmonized Sales Tax

HST).

The Liberals, meanwhile, feel it will bolster Ontario business. The president of the Greater Dufferin Chamber of Commerce, on the other hand, doesn’t see much difference between the new tax system and the one that already insists.

In fact, Ron Munro feels the HST will end up costing business more money than the present system.

“In fairness to both the federal and provincial governments, they both did what they had to do (in 2009) to provide stimulus money. I don’t think anyone was naive enough not to think it was going to come back and bite us.

“It’s now time to pay the piper.”

Ms. Jones ripped the government in a press release: “”The McGuinty Liberals are counting on their tax and spend policies to dig them out of Ontario’s largest deficit on record,” said the Conservative MPP. “McGuinty is relying on the revenue from his new (HST) to address the deficit instead of creating a sound economic policy that works for Ontario.”

As of July 1, the Retail Sales Tax (RST) will be replaced with a valueadded tax that will be combined with the federal Goods and Services Tax (GST) to create the federally administered HST. The provincial portion of the HST will be the current eight per cent and the federal portion will be five per cent, for a combined HST rate of 13 per cent.

The government says 83 per cent of consumer purchases will not see a new tax, since just 17 per cent will be subject to the HST.

The Liberals argue that the current retail sales tax is charged at each stage of production before a product reaches the store. This hidden tax increases costs to consumers and is a significant competitive disadvantage to businesses in Ontario.

Replacing the RST with the HST allows most businesses to be reimbursed for tax paid on their business inputs through the use of input tax credits.

These credits will be paid to most businesses for the HST they originally paid on many of their purchases, the government says, and capital investments, providing significant savings by lowering the tax burden on business.

Mr. Munro, meanwhile, doesn’t see too much difference between the proposed HST and the current GST.

He acknowledges that the new system will provide tax credits and save business some accounting headaches by working the same way as the GST; wherein a business keeps track of the 5% GST charged the supplier of the materials needed to make its product, then deducting it from the 5% it charges its customers.

It spares a business operator the pain of going through each purchased item and finding which is subject to RST and which is not.

Mr. Munro says, though, that the number of tax-exempt products has reduced. The HST “is a smoother system. But at the end of the day, you have to pay more.”

The provincial Tories, meanwhile, have come up with a number of proposals to spur business and bolster the economy.

One thing they have suggested is a move to “suspend the tax on new jobs.”

The idea is to encourage businesses to hire new employees by calling for a one-year payroll tax holiday – from health tax and WSIB premiums – on all new hires.

While Mr. Munro thinks it’s “a good initiative,” he says it, alone, would not persuade him to hire a new employee.

He looks at Workplace Safety Insurance Board (WSIB) premiums as a low-cost, mandatory health insurance that companies pay for their employees, in addition to private plans and benefits they buy into to ensure proper coverage.

As for the health tax, he points out that it’s a larger burden on the employer, but is still only one to two per cent of the total cost of the wages of a new employee.

“A few dollars will help, but it won’t give me the money I need to hire somebody,” says Mr. Munro, the owner of a flower business. “In a bigger corporation, where they may be hiring hundreds of employees, it might help. But not for smaller companies.”

As for larger business concerns, the new Liberal budget calls for a reduction in corporate tax from 12 to 10 per cent.

The Tories, meanwhile, are taking aim at the McGuinty government for their recent business dealings, particularly the recent multi-billion dollar deal for alternative energy industry development with Samsung of South Korea.

“Politicians and bureaucrats should not be in the business of picking winners and losers in the marketplace,” says the website entitled (PC Leader) Tim Hudak’s 10 Ideas to Create Jobs in 2010. “Billions of dollars in corporate handouts – including sweetheart deals for Korea based Samsung and a French video game company – reward companies who hire the best lobbyists.

“Instead, government should lower the overall tax and regulatory burdens to allow all businesses to succeed on a level playing field.”

Ms. Jones has also blasted the Liberals’ record of handling finances.

“Instead of creating a plan to bring jobs and prosperity back to Ontario, the Liberals have chosen to export jobs out of the province through the Samsung deal, and add $53 million onto Ontario hydro bills,” she said. “Wasteful spending amounting to $1 billion at eHealth; and the $25 million severance package for HST tax collectors, who do not lose a day of work, marks a year in the red for McGuinty.”

She adds that the Progressive Conservative caucus will be tabling an amendment to the budget to rescind the severance package offered to RST tax collectors.