Friday, August 26, 2011

Why progressives should support the HST

Ken Lewenza in a speech in December, 2009 on the anti-HST positioning from the right:
We can't buy into this. Neither can my friends in the New Democratic Party. I said to the Ontario NDP leader Andrea Horwath, "Andrea, the harmonized sales tax, as unpopular as it may be, cannot be an issue from the progressive side. It can't be an issue that makes Ontarians more cynical about taxes. We want to pay taxes. We want a civil society. We want health care. We want education. We want infrastructure. We do not want every Ontarian to think that taxes are bad.”
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We are arguing about elements of the harmonized sales tax, but brothers and sisters, don't buy into this tax rage because if you do, as progressives, we will be destroyed because you need taxes for a just society, as a society that cares for one another.
The anti-HST rhetoric solidifies an anti-tax mojo in Canadian society that in turn undercuts the glue that binds our social programs together. The Rob Fords, the Stephen Harpers, the Tim Hudaks love that rhetoric. Yes there was a particular political outrage in B.C. over the HST's introduction, rightly so. But it should not be exploited for political opportunism elsewhere. It contributes to an increasingly American anti-tax atmosphere that the right wing thrives on in Canada.

The HST does help business (and certain types more so than others) no question about it. As this National Post editorial outlines tonight:
The original PST taxed every stage of the production process. If a business needed parts and equipment to make a product, it would have to pay tax on each item, and then charge a tax on the final product. In contrast, the HST only applies to finished products. This removes the disincentive for businesses to invest in the province and ensures that the same tax is not applied to a product multiple times. The HST should, therefore, boost investment and reduce the cost of doing business. This is why the tax is supported by the Fraser Institute and the Canadian Taxpayers Federation — two organizations that are consistently against any tax increases — and supported by 45% of the electorate as well. That a large plurality of voters would vote to keep the tax despite its ugly birth convincingly argues that, handled correctly, the HST could have been adopted with relative ease.
So the anti-taxers have in fact voted for more tax. To go backwards. Out of a tax-them-not-me frenzy. But in doing so, it's self-defeating. It's a harder big picture argument to make, for sure. But creating a competitive environment for business is not a consideration separate and apart from the welfare of individuals who think they've gained from reverting back to the PST now. Those businesses provide the tax base that supports hospitals, education, etc. And of course, as others are pointing out, there's the $1.6 billion in HST adjustment dollars to be paid back to the feds. So it will be felt.

I see one NDP MP touting this referendum result as a victory, mostly on the basis of the democratic element of the B.C. situation. That's their position in B.C. anyway. In Ontario, the provincial NDP sit on the fence. Tweaking HST proposals in their election policies here and there but not opposing it at the end of the day. They support keeping it. In Nova Scotia, the NDP Premier Darrell Dexter has raised the HST by two points. So the NDP position across the country is situational and without overall integrity.

Taxes and how they are treated in Canada, how we speak about them, how we ensure we have resources to sustain and invest in our society, this is one of the central issues in Canada today. The HST result is a setback, no question.

Maybe more thoughts later, an early reaction to the news.