Tuesday, December 15, 2009

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.


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