Wednesday, May 25, 2011

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.

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