On selective benefits

We'll find out before too long whether the B.C. Libs' latest attempt to survive the imposition of the HST will be any more successful than what they've tried for the last two years. But the more interesting effect of today's announcement may be its impact on the other province which harmonized its taxes at the same time.

Here's the message which I'm sure will be repeated plenty more as the HST referendum progresses:

In order to head off that fiscal reckoning, the B.C. Liberals propose to raise corporate taxes by two points effective Jan 1 of next year and to postpone a scheduled reduction in the small business tax.

The moves constitute a reversal of longstanding tax policy under the B.C. Liberals, who've systematically reduced taxes on the business sector. When the New Democrats proposed similar increases, the Liberals denounced them, saying it would negatively impact the investment climate.'

But Finance Minister Kevin Falcon justified the increases by saying that the corporate sector had enjoyed most of the benefits of the tax shift under the HST.

Of course, in Ontario that benefit to the corporate sector from the HST was packaged with...more benefits to the corporate sector in the form of income tax cuts. And all this just before the McGuinty government declared that it had to start cutting back on public services due to the deficit which ballooned as a result of those giveaways.

Now, with B.C.'s government publicly acknowledging the real consequences of the HST and at least trying to paper over its effects, the Ontario Libs figure to have an even tougher time defending their choices. And it shouldn't come as much surprise if it's the party which has offered the more accurate critique of the HST all along that benefits as a result.

Long Weekend Zombie Lie Hunt

A couple of notes that desperately need correction in otherwise reasonable columns...

First, Bronwyn Eyre's column on the HST is much less cheerleaderish about the HST than the Star-Phoenix' usual offering on the subject.

But she does maintain the paper's habit of painting the issue as a false choice between "Canadians' ability to pay for the basics -- food, rent, utilities, transportation -- let alone the things that improve quality of life" and "(government) expenditures for infrastructure, education, health care...pensions and social programs". So let's offer up a reminder: the HST is bad for both, increasing both individual costs of living and government deficits for the benefit of the corporate sector.

Meanwhile, James Travers may be right to rein in the Libs' sense of entitlement. But his acceptance of a "self-evident" statement that Canada is closer to a Con majority than an alternative government depends on exactly the mistake I pointed out here.

In reality, of course, the real issue isn't which leader commands a plurality of seats following the next election, but which party (or combination thereof) can win the confidence of the House of Commons - making for far more favourable terrain than a simple Con vs. Lib seat count. And while the Libs seem to think it's in their interest to buy into Stephen Harper's flat-out lies as to what makes a government legitimate, the real lesson from Travers' column should be that anybody who wants to get rid of the Harper government should be pushing the Libs to stop using such a counterproductive message.

On rationalizations

Bill Tieleman's response to Gordon Campbell's HST op-ed is definitely worth a read. But for those of us in Saskatchewan, it's part of Campbell's excuse after the fact that bears particular attention based on the spin currently emanating from our own premier:

Although you may not have seen much media coverage before last summer, combining the PST and GST to create a harmonized sales tax is something that has been discussed publicly for many years.

Federal governments - past and present - and business organizations - large and small across the province - repeatedly asked us to harmonize the PST with the GST...

Each time we were asked, we said we would not consider it for two primary reasons. First, it would eliminate B.C.'s ability to set our own tax rate.

And it still does - BC has given up its tax sovereignty to Ottawa for the most part.

Second, we wanted to be able to shape our tax regime with flexibility that would allow us to exempt certain goods and services from being taxable. It wasn't until last year that kind of flexibility was available.

So the fact that harmonization had been discussed in some circles before - even having been rejected by Campbell's own government at the time - is being put forward as justification for not bothering to consider how the province might react to the HST, whether by consulting with voters, or even by taking their interests into account. Which looks to offer yet another parallel between Campbell's modus operandi and Brad Wall's - and serves as all the more reason to distrust Wall when he claims that we shouldn't worry about his making the same move in Saskatchewan.

Extra fireworks

In addition to Canada Day, let's not forget that two provinces are getting to celebrate Prostrate Yourselves Before Your Corporate Overlords Day as well. And while the general theme is one of rightful frustration, at least some people seem disturbingly enthusiastic about the prospect.

The reviews are in

As is so often the case, the Leader-Post is too quick to give Brad Wall credit. (Hey, CanWest's influence has to count for something, right?) But it's on target with its conclusion about tax harmonization:

The Ontario and B.C. governments say harmonization will simplify the tax system and create thousands of jobs by removing the burden of sales taxes currently paid by businesses on their inputs. Prices should actually fall under harmonization, the conventional wisdom goes.

Consumers aren't buying it. Ipsos Reid surveys in both provinces found more than 70% oppose the new taxes. In B.C., consumer anger has resulted in a 700,000-name petition that was to be delivered to the province's government today by former premier Bill Vander Zalm. Under B.C. law, it could result in debate on an HST-repeal bill or trigger a non-binding referendum.
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Unless harmonization resulted in no extra cost for taxpayers there is no way the public would support a business tax break at their expense.

In any case, businesses in our hot economy seem to be doing very nicely without an HST.

(Edit: fixed typo; added link.)

On familiar tactics

For those wondering whether Brad Wall's HST letter in the Star-Phoenix should offer any comfort to Saskatchewan citizens who don't want to see the province's tax structure altered to benefit corporations at their expense, let's take a look at what he has to say:

(A harmonized sales tax) would extend the PST tax base to a broad range of goods and services that are presently exempt from the provincial sales tax...

Such items that are currently PST-exempt include energy-efficient appliances, membership fees for clubs and gyms, newspapers and magazines, taxi fares, restaurant food and the professional services of architects and accountants. This is a major concern.

The harmonized GST would make it harder for future provincial governments to lower or raise sales tax rates, which reduces flexibility. In short, a harmonized GST is not something that is contemplated in the B.C. Liberal platform.

Oops, wrong HST response. But it still says plenty about how seriously we should take Wall's words:

Our government is not of the orthodoxy that the HST must be the No. 1 priority in a jurisdiction that needs to do more work on competitive personal and corporate tax rates, as well as lower property taxes.

Moreover, the discord fomented over HST implementation and all the attendant exemptions, credits and tinkering to make it politically palatable highlight the comparative efficacy of tax reform in other areas.

The discord and tax burden shift resulting from an HST do not fit with (the Sask Party government's) objectives.

If anything, one can find far more of a principled objection to the HST in the B.C. Libs' campaign statement (which was of course fully inoperative within a matter of weeks). Wall doesn't say for a second that he disagrees with the principle of making citizens pay more for the benefit of corporations - only that he doesn't want to deal with the political consequences of pushing it through, and figures he can do as much to make the tax system more regressive in other ways without the same backlash.

What's more, if Wall's lone reason for not harmonizing immediately is the question of whether it's "politically palatable", then it's worth keeping in mind that the political calculations involved might change radically by December 2011 if he figures that any anger will die down by the following election. And even though Campbell's similar conclusion has proven to be spectacularly wrong, it's entirely plausible that Wall might still figure that he can get away with the HST in the absence of the petition and recall processes that have kept the issue alive in British Columbia.

In sum, Wall's letter looks to be just one more example of his slightly tweaking the Campbell playbook to get to the same end result, rather than representing any reason for optimism that he'll avoid imposing harmonization on a province that's already definitively rejected it once before. And unlike their B.C. counterparts, Saskatchewan voters will have only one chance to send the message that they're not about to accept an HST.

Paying more, getting less

Months after pushing the change through Queen's Park in the absence of full information, the Ontario government has finally bothered to release its own numbers on the effect of the HST. And even in a study which itself looks to make some problematic assumptions to paper over the harmful effects of harmonization, the results plainly don't match the McGuinty government's spin. Here's Erin's summary:

When combined with $2.4 billion of personal income tax cuts and credits, $1.9 billion of pass-through still does not offset $4.7 billion of additional sales-tax costs to Ontario consumers (page 6). Even as the provincial government gives up billions of dollars of revenue, households will pay more tax.
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Perhaps there is a case to be made that Ontario residents should pay more tax and lose some public services in order to enhance the competitiveness of Ontario-based businesses. The Statistics Canada and Finance studies have forced the provincial government to start making that case, rather than simply claiming its tax changes will deliver financial benefits for everyone.

The real debate is about using public money, whether taken from consumers (the HST) or from general revenues (corporate tax cuts), to support business. We should ask whether across-the-board tax cuts on business inputs and profits are the best way to promote investment and employment in Ontario. As I have suggested elsewhere, more targeted measures could prompt more investment and employment at less cost to consumers and the provincial treasury.

Lying in wait

For years now, it's been an open question as to what Brad Wall's promises not to make changes on issues such as Crown corporations and the HST actually meant. But Wall's interview with the Globe and Mail's report on business makes the answer entirely clear:

Why not a harmonized sales tax?

I’m not a member of the church of harmonization orthodoxy, at least as long as this jurisdiction has other tax modification priorities. Our corporate rate is too high; our small business thresholds are too high. We want to make progress on both of those. We have three tiers of [personal] income tax and we’ve said that a flatter system is important as we want to attract more entrepreneurial folks. We started with reforms in last year’s budget to reduce the property-tax share of education funding. This is a capital tax, and frankly a capital tax is far more insidious for an economy than the lack of harmonization.

How do you respond to business leaders who say you are too timid in easing the weight of government, such as the province’s Crown corporations?

We have a growth agenda for the province. We need to continue to get re-elected to continue to make these changes, maybe not as fast as people would like. But improving the economy’s competitiveness is a process, not an event.

Of course, there's another alternative which Wall has already latched onto in pushing ahead with policies he's promised not to implement. (Who's up for some tax WEPAnization?)

But the difference between Wall's strategy with the TILMA/WEPA and the other areas of controversy seems to be based solely on the time frame for his planned reversal. Wall leaves no doubt that tax harmonization is part of his long-term vision - just as soon as he's made other parts of the tax system more regressive first. And that likewise, he sees privatizing the Crowns as part of "these changes" that he ultimately intends to carry out - but he's biding his time for now until he's softened up the anticipated public backlash.

In other words, Wall has outright admitted that his promises not to private Crowns or harmonize taxes don't actually mean anything when it comes to his intentions in government; instead, they're merely political ploys to strengthen his grip on power, the better to enable him to do later what he's promised not to do now. But fortunately, there's an obvious way for Saskatchewan voters to stop Wall before he gets the chance to declare that all previous promises are null and void.

Well said

Erin points out the absurdity of the McGuinty government's attempt to justify imposing the HST on the province:

(H)armonization will reduce annual revenues by $0.7 billion because the input tax credits paid to business ($4.5 billion) exceed the net additional tax paid by households ($6.1 billion - $2.3 billion). The corporate income tax cut will reduce annual revenues by a further $2.4 billion. To quote McGuinty again, “Our tax reforms, in fact, cost the treasury billions of dollars.”

King Louis XIV’s finance minister, Jean Baptiste Colbert, famously quipped, “The art of taxation consists in so plucking the goose as to get the most feathers with the least hissing.” Conversely, the McGuinty government has managed to provoke a full-blown tax revolt without gaining any additional revenue.

What's most remarkable about the current discussion is the fact that McGuinty is trying to paint the fact that the HST will "cost the treasury billions of dollars" as a plus even as a wave of deficit hysteria is spreading across the country. But while there's little sense that even the admission that he's voluntarily damaged Ontario's fiscal position will change McGuinty's dierction, it might be worthwhile for those trying to push the same policy elsewhere to take note of the reality.

On manufactured claims

I wasn't sure if there were any claims about the HST left to be debunked before the tax hike on consumers officially takes effect. But Erin has found at least one more, pointing out that Ontario's attempts to sell the tax as a boon to manufacturers fly in the face of reality:

Advocates of the Harmonized Sales Tax often suggest that it will support Ontario’s beleaguered manufacturing sector. They emphasize that the current Provincial Sales Tax applies not only to finished products purchased by consumers, but also to some inputs purchased by businesses. As one business sells components to another, sales tax could be paid repeatedly along the supply chain.
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I have always been sceptical of this claim because the existing sales tax already exempts almost all of the machinery and equipment used in manufacturing. Ontario’s Tax Plan for Jobs and Growth, a fascinating (if obnoxiously titled) document released by the provincial government late last year, confirms my scepticism.

Table 2 indicates that, when fully implemented, the input tax credits will give $4.5 billion per year to businesses. Manufacturers will receive $510 million, 11% of the total.

By comparison, the most recent Statistics Canada figures indicate that manufacturing accounted for 17% of Ontario’s Gross Domestic Product in 2008. So, the Harmonized Sales Tax will provide disproportionately little benefit to manufacturing.

Third time's not the charm

A new version of Ernie Lightman's CCPA HST study has now been posted - featuring yet another new set of numbers. But perhaps more importantly, the report's previous commentary that it remains to be seen how much of any business savings will be shared with individuals has been removed, replaced by an explicit statement that the government's rationale for harmonizing has been ignored in favour of an assumption that cost reductions will be passed along:

This paper measures the impact of the tax mix shift between the personal income tax and the HST. It does not address the issue of tax shifts between business and households in the change from the RST to a value added tax and assumes implicitly that businesses will pass the bulk of these savings on to consumers.

At the very least the new phrasing is somewhat less opaque than the previous two drafts. But it should be beyond doubt now that the Lightman analysis (a) is based on a highly dubious assumption which isn't even accepted by HST proponents, and (b) is utterly incompatible with the other pro-HST material which estimates benefits to the corporate sector on the assumption that businesses actually won't pass along any savings to consumers.

File not found

Remember the much-ballyhooed (if not entirely uncriticized) CCPA study by Ernie Lightman which proclaimed that tax harmonization would have only a small negative effect on individual citizens?

I ask only since the CCPA's previous link to the study has now disappeared. As has any reference to the key terms of the study's title off the CCPA's website:



Of course, the study's disappearance will almost certainly receive far less attention than the corporate-friendly headlines which it generated initially. But it's worth noting that the spinmeisters still pointing to the study in a losing battle to sell the HST are relying on material which has apparently been disavowed even by its own sponsor - leaving all the less reason to take the pro-harmonization case seriously.

On fixed rates

Jane Taber rightly points out Con MP Patrick Brown's misleading claim that he and his government had nothing to do with the HST despite voting for it twice personally. But that isn't the only glaring flaw in his attempt to distance himself from his government's policies.

Brown spends most of his column space criticizing the province for not lowering the HST rate while implementing the tax. But there's just one slight problem with that complaint: it's the federal government which has insisted that the province keep the rate right where it is.

I've noted before that the preliminary agreement between the Harper Cons and the McGuinty Libs provided that the province would be required to keep the HST rate where it is for at least two years following implementation. And that's made all the more clear in the comprehensive agreement that's since been signed between Jim Flaherty and Dwight Duncan:

15. The Parties agree that the PVAT Rate in respect of the Province will be 8% as of the Implementation Date.

16. The PVAT Rate in respect of the Province may be increased, or decreased, in accordance with the provisions of this Agreement after a minimum period of two years from the Implementation Date. Following that two-year period, any change in the PVAT Rate in respect of the Province, as permitted under the provisions of this Agreement, will not occur more often than once in any twelve-month period.

So if Brown wants to know why Ontario isn't talking about lowering its HST rate, at least part of the answer is that the Con federal government won't let it. And whether Brown is ignorant enough not to know that or dishonest enough to pretend his government hasn't tied the province's hands, it's fairly clear that his constituents don't have much reason to believe what he has to say on the subject.

HST = More Red Ink

Following up on this morning's post, Erin has the details on how the HST and related measures will increase Ontario's deficit:

(I)t is important to note that Bill 218 does not actually provide more revenue. The 2009 provincial budget indicated that the sales tax changes would generate an additional $2.2 billion annually. However, the personal income tax reductions and credits to compensate for those sales tax changes will cost $2.3 billion annually. Recent concessions on prepared food and real estate will cost the provincial government a further $0.6 billion annually.

So, the whole harmonization process will actually reduce provincial revenues available for public purposes by approximately $0.7 billion per year. On top of that, Bill 218 enacts corporate tax cuts that will cost a further $2.3 billion per year when fully implemented in 2014-15.

This budget legislation amounts to a transfer of $3 billion from the public purse - and billions more from Ontario consumers - to the corporate sector.

On factual deficits

I've spent no lack of time on this blog dealing with zombie lies and other false claims about the HST in B.C. and Ontario. But remarkably enough, the absolute worst argument I've seen for the HST lately originates not in either of the provinces which has actually been debating harmonization, but right here in Saskatchewan. So let's take some time to debunk the excuse being pushed by the Star-Phoenix to try to reopen an issue which otherwise isn't under discussion:

In Canada, where the federal government foolishly cut the GST to five per cent from seven per cent, and in the process weakened its finances, squandered its surplus and reduced its options just as the country was heading into the worst downturn in decades, economists are suggesting it would be better to increase the tax now in order to reduce the deficit.

Roger Martin, dean of the Rotman School of Management at the University of Toronto, is warning that, without increasing consumption taxes, Canadians could face the kind of destructive cuts to education and innovation that took place in the 1990s.

Adopting the HST rather than resorting to the "big chopping exercise" on program spending resorted to in the past, is Ontario and B.C.'s best chance to continue reducing the prosperity gap with the U.S., Mr. Martin says in his report, Navigating Through the Recovery.
...
But if creating jobs, tackling deficits, competing with 130 other nations that have such a tax or increasing personal wealth isn't enough reason to convince governments and citizens to adopt a harmonized tax, perhaps one should consider Mark Carney's dilemma.

Now, one can make the argument that the editorial never quite goes so far as to directly claim that harmonization itself will reduce the province's deficit. But considering that the need to deal with a provincial deficit is repeatedly cited as an argument in favour of harmonization - and chopping program spending listed as the alternative - it's hard to reach any conclusion other than that the Star-Phoenix editorial board is trying to get Saskatchewanians to believe that harmonization would reduce the provincial deficit.

Which, needless to say, is absolute nonsense.

The usual operating premise of harmonization has been that the combination of tax increases on consumers and reductions on business - in the absence of any measures to compensate for the higher consumer costs - roughly evens out (i.e. is "revenue neutral"). Which would seem to be an easy enough theory to test if the governments involved had actually let people know what the impact of the policy would be before ramming it down their throats.

Curiously enough, though, neither B.C. nor Ontario seems to have actually provided any public estimates to show whether that's true: while the amounts of the corporate reductions and compensatory measures have been thrown around at every opportunity, I haven't seen any actual dollar amount placed on the cost to consumers of paying HST on a broader set of items by the governments who are imposing that change. And that should itself serve as a signal of just how little chance that would be of the policy surviving if people actually had full information about it.

Fortunately, at least one government has now offered up a simple, accurate set of estimates (warning: PDF) as to what harmonization would mean. And in Manitoba, the result would be $134 million less annual revenue for the provincial government based on harmonization. (Or $105 million looking only at the impact on consumers and businesses - which is probably the fair number to use given the discussion about different levels of government below.)

Put in terms that even somebody who gives John Gormley regular column space can understand: harmonization makes deficits worse. And that's before a province even lifts a finger to try to mitigate the regressive effects of the tax on individuals.

Granted, the federal money being offered as a bribe to encourage harmonization would paper over that gap: in Manitoba's case, it would cover a little over two years' worth of lost revenue. But it's not as if that money is ultimately free either. In effect, the Star-Phoenix is encouraging the federal government to carry a deeper deficit in the near term, in order to pay off the province to agree to go into deeper deficits in the medium and long term. And all in the name of fiscal responsibility and deficit reduction.

Moreover, all of the above applies even without the province doing anything at all to try to mitigate the effects of increased taxes on individuals. And if the Star-Phoenix thinks that the governments in B.C. and Ontario have had trouble trying to sell the tax while being able to point to factors which could even out some of the damage, just wait to see what would happen if the tax were introduced without even a pretense of concern for the people affected.

Before I close out this post, the deficit claim looks to me to be both the biggest whopper in the editorial. But there's no lack of other claims which are equally easily debunked, including such gems as:

(P)oliticians from all major parties...promoted the shift.

Quick, name one from the NDP - which obviously has to be included for the wording to be "all" rather than "both". Yeah, didn't think so.

In the next decade, the change is expected to create almost 600,000 new jobs in Ontario alone that wouldn't exist under the current regime.

Asked and answered.

Roger Martin, dean of the Rotman School of Management at the University of Toronto, is warning that, without increasing consumption taxes, Canadians could face the kind of destructive cuts to education and innovation that took place in the 1990s.

Included above, but let's address it on another front. If the goal is to increase income by raising consumption taxes, why on earth would that be done by eliminating consumption taxes on the entire corporate sector?

In sum, then, the Sask Party's mismanagement isn't a reason to bring in a harmonized sales tax. And the fact that the Star-Phoenix is so eager to present the HST as a solution to a problem which it would only exacerbate - while being so shamelessly off base in so much of the rest of its argument - should offer reason to be skeptical about anything it says on the topic in the future.

(Edit: fixed typo.)

A zombie lie is born

Yesterday, I noted one problem with the CCPA's report on the HST. But as has consistently been the case when it comes to the HST, the most-repeated talking point is one that's based on ripping two words out of context: in this case "revenue neutral". So let's make absolutely clear what the CCPA's analysis does - and doesn't - say about the effect of harmonization.

There are two key assumptions which explain where the phrase comes from in the CCPA's report. First, as I noted yesterday, there's the fact that the HST is being compared to unrelated tax measures applied to individuals. While the "revenue neutral" declaration applies only if one compares the price hike resulting from the expansion of sales taxes on individuals to the credits being offered through other tax channels, there's no reason to actually assume that one is inextricably linked to the other. And if one looks at the HST alone (which can easily be done at page 8 of the CCPA's report), the result is a tax hike on families averaging approximately $500 each year.

More importantly, the CCPA's global conclusions are based on the effect of the HST and other tax measures on individuals only, and don't take into account the loss in public revenue resulting from corporate exemptions. Which is where the growing zombie lie comes in.

The next wave of pro-HST spin seems to involve pretending that the CCPA's study somehow shows that the HST scheme as a whole would be revenue neutral for the provincial government. But in reality, the corporate exemptions which are explicitly excluded from the CCPA's study will cut provincial revenue by $4.5 billion per year (the same number as the oft-trumpeted amount of eliminated "embedded sales taxes").

So no matter how desperately its proponents try to rip phrases out of context, the HST isn't revenue-neutral by a long shot - whether one looks at its impact on individuals (where it imposes real costs), or on the government as a whole (where it substantially reduces the public resources available for the provincial government). And as with the "591,000 jobs!!!" declaration that's previously been debunked, anybody claiming the HST to be "revenue neutral" based on the CCPA study can safely be dismissed as arguing in bad faith.

Edit: fixed wording.

On baselines

One can understand why the CCPA's study on the HST might have been designed at one time to assume that other tax moves designed to minimize the pain of shifting the tax burden onto individuals would be linked to harmonization. But considering that the McGuinty government has declared that the other changes will happen regardless of whether or not the HST is implemented, doesn't any accurate calculation now have to involve the effect of the HST on its own rather than tossing in credit for what would happen with or without harmonization?

The Hated Sales Tax

While the NDP may be alone among political parties in presenting a coherent case against the HST, it most certainly isn't lacking support for that position in the general public:

Three-quarters of Ontarians oppose the looming 13 per cent harmonized sales tax, suggests a new Toronto Star-Angus Reid Public Opinion survey.

In troubling news for Premier Dalton McGuinty's Liberals, 70 per cent of the 1,162 people polled said their opinion of the government has worsened due to the HST.
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The online poll also found that 76 per cent of respondents are familiar with the tax, which melds the 8 per cent provincial sales tax with the 5 per cent federal GST as of July 1. That means an extra 8 per cent tax on many items that are now exempt from it but are already subject to the HST.

The poll, conducted Nov. 23 to 26, is considered accurate to within 2.8 percentage points.

With 75 per cent opposing the tax and five out of six – 83 per cent – predicting it will make goods and services more expensive, it's clear the government's message that the business-friendly levy will boost the economy is not taking hold.

Of course, the McGuinty government's response is that public opinion will shift if it just repeats its patently false "job numbers" claims often enough. But from an outsider's perspective on both provinces, it looks to me like Ontario has actually had far more of a pro-HST slant in the positions presented publicly to date - making it highly unlikely that a greater focus on the issue from both sides will do anything but further entrench the current state of public opinion.

On incomplete hearings

Shorter Dwight Duncan:

Having recently declared our latest bottom-line-and-this-time-we-mean-it on the HST, we've decided it might be a good idea to let the public have a single day's worth of say in the matter.

On zombie numbers

Apparently Andrew Steele was right about one thing, as Jack Mintz' inflated and misleading job number has been parroted nonstop by HST backers from the moment it was first released (even by those who should know better). So let's quickly recap the main problems with Mintz' report, as well as pointing out how it's completely incompatible with one of the main pro-HST talking points.

The much-bandied-about "591,000 jobs" number:
- incorporates other tax changes along with the HST. On this ground alone, anybody saying "the HST will create 591,000 jobs" can be dismissed as either not knowing what they're talking about or lying through their teeth;
- doesn't take into account negative job impacts from the increased taxes on individuals;
- relies on assumptions about marginal tax rates which completely ignore the reality that reductions in one jurisdiction such as Ontario may simply result in a corporation paying more tax elsewhere;
- ignores existing policies such as research tax incentives and municipal tax benefits which affect the amount of investment made by the private sector; and
- ignores the fact that a focus on capital investment may actually reduce employment in some cases (by encouraging the relative use of capital as opposed to labour).

But let's add another major problem to the mix. Mintz' numbers assume that all of the benefit of tax harmonization will flow directly to businesses, counting every dollar of PST elimination as applying to a reduction in corporate marginal effective tax rates. That would appear to be completely incompatible with the oft-cited claim that businesses will in fact pass along any amount of their PST savings to consumers, as money which doesn't stay in corporate hands surely wouldn't figure to alter investment decisions.

In sum, there's no reason to let pro-HST voices double-count the supposed benefits of harmonization. If they want to claim that any corporate tax reductions will be passed along to consumers, then that has to be taken into account in any wishcasting as to how much money corporations will have at their disposal to invest; or conversely, anybody trumpeting Mintz' jobs number can be assumed to believe that not a red cent of any tax savings will actually be passed along to consumers. And the fact that the pro-HST side has thus far been based on so many utterly inconsistent claims would tend to signal that they'll be reluctant to face up to the realities once that choice is put in front of them.