Thursday, January 07, 2010

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.

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