Ontario’s Liberal government will introduce legislation today to proceed with its controversial plan to harmonize the province’s eight per cent sales tax with the five per cent GST, a move the opposition parties call a blatant tax grab.
The legislation will also include a package of cuts to income, small business and corporate taxes and provide for tax rebate cheques of up to $1,000 for families to offset the HST, which will add eight per cent to many items currently exempt from the provincial sales tax.
The idea of harmonization is to make Ontario businesses more competitive by lowering their taxes, which allows them to create more jobs, said Finance Minister Dwight Duncan.
“Right now there’s a hidden tax — businesses pay tax on tax on tax,” said Duncan. “This unbuttons that, puts the money back into their pockets. They in turn hire people and also by the way, lower prices.”
Critics point out that businesses may not in fact pass on their tax savings by lowering prices, but the government says competition will lead to lower prices, as it has done in other places that harmonized sales taxes.
Ontario’s Progressive Conservatives oppose harmonization as a “massive tax grab,” even though it was their federal Conservative cousins who convinced Ontario to sign on to the idea, with the help of a $4.3 billion grant from Ottawa.
Opposition Leader Tim Hudak has been travelling the province railing against what he calls the “Dalton sales tax.”
“We always suspected this was a $3-billion greedy tax grab,” said Hudak.