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- Aug 29, 2007
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Globe and Mail:Time for McGuinty to live in tax harmony (Nov 1, 2007)
http://www.reportonbusiness.com/servlet/st...lumnsBlogs/home
QUOTE Turns out there was a missing phrase in Jim Flaherty`s election speech - er, fiscal update - on Tuesday. Luckily, we`ve uncovered the phantom text. When he talked about giving Canada the lowest business taxes in the G7, he meant to add: "As long as Dalton McGuinty goes along with it."
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Ontario is holding back the country now, and the McGuintyites are part of the problem.
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The pressure will be on to cut it in the next provincial budget. But even that will only do so much for the smelly old factories that line the QEW and 401 highways. To benefit from corporate income tax cuts, after all, you`ve got to have income. When 90 per cent of your sales are to U.S. customers and the loonie is climbing a cent every bloody week, profits get rather slim, rather quickly. What could the McGuinty government do instead to provide some relief? It could drop its silly insistence on having its own separate sales tax and harmonize with the GST. Just get it over with.
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By some estimates, more than $6-billion of the $16-billion the province collects in RST is paid not by consumers, but by companies, buying stuff to run their businesses. If you need an office chair, Queen`s Park will grab an extra 8 per cent, thanks very much. Dial long distance, pay 8 per cent. Go see a customer and stay in a hotel, pay 5 per cent. Take that customer out for a drink, it`s 10 per cent. Unlike the GST, businesses can`t get refunds for the RST they pay on business inputs.
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There`s little reason to assume it would result in a major loss of provincial revenue. Finn Poschmann, the senior policy wonk at the C.D. Howe Institute, says a universal sales tax could easily be designed to be revenue-neutral, probably at a rate not too far from 13 per cent (Ottawa`s 5 per cent GST, plus the 8 per cent RST). For most economists, the issue is almost beyond debate. Harmonization is the way to go.
http://www.reportonbusiness.com/servlet/st...lumnsBlogs/home
QUOTE Turns out there was a missing phrase in Jim Flaherty`s election speech - er, fiscal update - on Tuesday. Luckily, we`ve uncovered the phantom text. When he talked about giving Canada the lowest business taxes in the G7, he meant to add: "As long as Dalton McGuinty goes along with it."
...
Ontario is holding back the country now, and the McGuintyites are part of the problem.
...
The pressure will be on to cut it in the next provincial budget. But even that will only do so much for the smelly old factories that line the QEW and 401 highways. To benefit from corporate income tax cuts, after all, you`ve got to have income. When 90 per cent of your sales are to U.S. customers and the loonie is climbing a cent every bloody week, profits get rather slim, rather quickly. What could the McGuinty government do instead to provide some relief? It could drop its silly insistence on having its own separate sales tax and harmonize with the GST. Just get it over with.
...
By some estimates, more than $6-billion of the $16-billion the province collects in RST is paid not by consumers, but by companies, buying stuff to run their businesses. If you need an office chair, Queen`s Park will grab an extra 8 per cent, thanks very much. Dial long distance, pay 8 per cent. Go see a customer and stay in a hotel, pay 5 per cent. Take that customer out for a drink, it`s 10 per cent. Unlike the GST, businesses can`t get refunds for the RST they pay on business inputs.
...
There`s little reason to assume it would result in a major loss of provincial revenue. Finn Poschmann, the senior policy wonk at the C.D. Howe Institute, says a universal sales tax could easily be designed to be revenue-neutral, probably at a rate not too far from 13 per cent (Ottawa`s 5 per cent GST, plus the 8 per cent RST). For most economists, the issue is almost beyond debate. Harmonization is the way to go.