On business inputs

In comments here, I noted what strikes me as the underlying philosophy behind the the HST and other efforts to shift the cost of taxes from businesses to citizens. But it's worth going into a bit more detail as to just how bizarre the distinction may be.

Just so there's no doubt what type of goods will be covered by the HST, here's the Campbell government's attempt to get restaurants onside despite the increase on taxes for their customers:

For example, a restaurant will no longer pay sales tax (PST) on products which are considered business “inputs” under HST such as:

* fridges, stoves, freezers, dishwashers and other appliances
* energy for heat, cooking and operating equipment and lighting
* cleaning supplies, such as rags, soaps and cleaning solutions,
* cash registers, computer hardware and software
* equipment repair and maintenance services
* paper towels and toilet paper
* customer food bills and menus
* cloth napkins, table cloths, tray covers and placemats
* pots, pans, kitchen implements and knives
* plates, bowls, glasses, cups, other reusable dishes, and cutlery
* coffee machines, blenders, mixers and other small appliances
* free‐standing equipment such as juice dispensers, ice machines and coolers
* office equipment, supplies and furniture,
* advertising materials, such as flyers and brochures
* items purchased to give away as free promotions

Note that the majority of the items which the Campbell government brags about making tax-free for restaurants are also items which are used regularly for home purposes. So let's ask the question which seems to have been utterly ignored by the HST's proponents: is there actually any basis in principle for treating those items differently based on whether there's a profit motive involved?

Is there an obvious reason to consider keeping a home clean and well-maintained to be "consumption" to be accounted for as a negative externality when it's merely done for the benefit of family, friends and unincorporated groups, but a "business input" if some clients might also stop by? And if so, what does that say about the value we place on providing for one's home and family?

Is there in fact some real economic benefit to taxing the price of a computer which will be used for non-profit purposes including a blog without ads, while treating a blog with ads (and thus some theoretical claim to potential profit) as a business which entitles the computer's purchaser to a 12-13% rebate?

Is there a particular reason why it's considered taxable consumption to merely raise children, but a tax-creditable business enterprise to raise them for export?

Okay, the analogy likely breaks down at some point. That said, it still seems that the starting point has to be that a good purchased and consumed is a good purchased and consumed. And some hint of an underlying profit motive on its own hardly looks to be justification for overriding the considerations underlying consumption taxes.

Unfortunately, it doesn't look like the HST debate to date has involved the least bit of scrutiny toward the premise that businesses ought to be treated more favourably than mere citizens.

Which itself seems to reflect a trend which deserves to be pointed out more than it has been. While some mention has been made of the effort to convert Canadians from seeing themselves as involved citizens to identifying themselves primarily as consumers defined by what they own, the push seems to be on toward the next step: a country of 33 million independent consulting firms seeking to maximize profit at every turn, with the mere consumers in our midst punished for their lack of interest in becoming capitalists with higher taxes.

Of course, if the HST does end up spreading from coast to coast to coast, there will be ample reason for Canadians to make just that switch for tax purposes. But is it ultimately a plus for us to be judged as possible profit centres first and foremost, while activities which can't be classified under that heading are subject to relative tax disincentives? And isn't it worth at least having the discussion in some detail before the tax system is shifted even further toward putting profits first?