On July 1st, Ontario and BC will join the roster of provinces harmonizing their provincial sales tax with the GST. Many goods and services that currently have no PST will suddenly jump 8% in cost as the new combined tax extends the tax-man's reach deeper in our pockets. This includes such basic necessities as hydro, natural gas, and gasoline, along with funerals, lawyer fees, memberships, web design, and internet access.
In British Columbia, former premier Bill Vander Zalm has spearheaded an anti-HST petition to delay implementation of the controversial tax, and subject it to a referendum. Legislation exists in BC to trigger a referendum if a petition gathers the signatures from at least 10% of the eligible voters in every riding. As of June 14, the threshold has been exceeded with 15% of residents signing their name in opposition to the HST.
Ontario has no such petition mechanism, and nobody has taken the lead towards organizing against to the HST here, although some opposition politicians spouted insincere-sounding hyperbole against a tax they would readily embrace if in government themselves.
As a small business owner, the Ontario government has provided their best propaganda to convince us of the coming Pollyanna.
"On July 1st, the HST comes into effect throughout Ontario, replacing the PST and GST. For businesses, it means updating accounting and invoicing systems and taking advantage of tax cuts because of Ontario's tax changes. These tax changes will help your business grow. Learn how you can prepare. Talk to your accountant or visit http://ontario.ca/hstready."
So, business computer software will be updated magically for free, staff will be trained at no expense, and new opportunity awaits! For some reason, an 8% increase in taxes is being touted as a tax cut. This is called governing by convolution, and politicians rely on this technique to fleece taxpayers while pretending there will be net benefits.
They go on to state, "You should modify accounting, billing and invoicing systems, cash register and point-of-sale systems, including web interfaces and automatic payments, to switch to HST and remove PST." All must be ready to operate flawlessly under the new system on July 1st. It appears that government spin doctors have completely underestimated the cost and complexity of making business changes that are by no means trivial, especially for small businesses.
Having a computer system fail or crash is a major business liability. Most businesses could only survive a few days without the ability to bill customers, and the costs of catching up from a system failure are astronomical.
If we are not convinced at the greater efficiency and profit margins that have been promised, the Ontario government provides us with the final compelling arguments, "Assess the impact of HST on budget and business plans to account for lower costs and shifts in business purchasing."
There is a divergence between what they want this to mean, and what reality will face business owners next month. This is the government voodoo where business costs are supposed to be lower, resulting in the paradox of cost savings being passed on to consumers, higher profits, and new hiring - all direct benefits attributed to the HST. Only an overpaid bureaucrat could invent a scenario where lower prices, substantial IT costs, and new staff result in a positive impact to the bottom line.
The entire scheme seems to hinge on the wishful thinking that suppliers will actually pass on any savings at the wholesale level that they actually might generate. Not long ago, it took the threat of federal legislation to bring prices of goods imported from the United States down when our dollar had been flirting with parity. While quick to jack prices on US goods when our dollar dipped to the sixties, they never really did pass any savings along to retailers on the rebound, a disparity that remains evident today.
More proof of the government's flawed projections can be asserted by examining the GST decrease. No evidence was found of any savings being passed on to consumers. In fact, the price of gas actually rose when the GST cuts were supposed to save a penny per litre. If corporations have a chance to line their pockets even more, history shows they will.
Dalton McGuinty has proven to be quite adept at buttering his bread on both sides in order to mislead Ontario voters. He's misrepresented a scenario where businesses will be paying more for everything, doing more paperwork, hiring more people, and relying on purchases from consumers who are stretched even more thin by McGuinty's tax grab.
McGuinty has long insisted that costs will be lower by adding more tax at the barrel-head and every step up the supply chain. Unlike BC, Ontario voters seem destined to roll over and pay through the nose, without questioning McGuinty's flawed logic. One lesson we should have learned is that McGuinty is not inclined to tell us the truth. Only now has McGuinty started to reluctantly admit that the costs of his HST will be far higher than he was telling us.
During the last election, he pledged to not pursue the HST, then became mesmerized when Stephen Harper and Jim Flaherty dangled some shiny trinkets to make him sign on. Being the biggest tax grab in Ontario history, McGuinty simply could not resist. He thumbed his nose at the legislature, refused to hold public meetings, and cut off debate in order to give us the tax.
As just about everything starts costing us more, remember Dalton McGuinty arrogantly snubbing taxpayers by telling us we have to wait until the next election to have any say in the matter. On top of the eHealth scandal, Ontario Hydro Sunshine Club domination, and general government waste, voters will have plenty to vote against, and nobody to vote for.
