VICTORIA – A report released this week by the Government of Manitoba confirms that the HST is a bad tax that will hurt consumers, say the New Democrats.
“This report confirms what the B.C. Liberals continue to deny,” said North Coast MLA Gary Coons. “The HST will hurt consumers in provinces that implement it.”
“British Columbians are already suffering from the economic downturn,” said Bruce Ralston, New Democrat finance critic. “This is the worst time to introduce a tax that will curb spending and leave less money in the pockets of hard-working families.”
Sales Tax Harmonization In Manitoba: What It Would Mean For Households, Businesses And Public Finances says that with “an HST in Manitoba, consumers would pay $405 million more in provincial sales tax.” Ralston noted that the total cost for our province would be higher, given that the population of B.C. is nearly four times that of Manitoba.
“Manitoba looked at the HST carefully and decided not to adopt it,” said Ralston. “In B.C we had a Liberal government say during the election they had no plan to implement a Harmonized Sales Tax, then as soon as the election was over, without any careful analysis, announced the HST.”
The Manitoba report also acknowledges that even items not directly affected by the introduction of a HST, such as residential rent, could cost more due to the increases that owners face.
“The full impact of the HST on North Coast communities may not be known for some time,” said Coons. “Business owners and landlords can’t soak up the increases they face from the HST, they’ll pass those on to consumers.
Coons said a recent poll by Ipsos Reid shows 82 per cent of British Columbians are opposed to the HST, and most believe it will hurt our provincial economy. The Manitoba government did the right thing…they listened to the people, they listened to small business and determined that there is a risk to economic recovery and a huge burden that would be placed on Manitoba families at a time of economic uncertainty. It’s time Gordon Campbell did the right thing and listen to British Columbians.
“People know the HST is a $1.9 billion tax shift on to consumers,” said Coons. “If only seven B.C. Liberal MLAs heed the wishes of their constituents and vote against the HST, it can be stopped.”
Carole James and the New Democrats have been holding the B.C. Liberals accountable for breaking their word on the HST, and for backtracking on their election promises to protect health care, education, and other vital services.
-30-
Winners and losers
THOSE who would gain under the HST:
Construction companies ($267 million), manufacturing ($69 million), retailers and wholesalers ($64 million) and farmers ($18 million).
Overall, the net benefit to business would be $510 million a year in Manitoba.
Those who would lose under the HST:
Consumers would bear the brunt, with a total annual tax increase of $405 million.
The provincial government would be out hundreds of millions of dollars annually if it cushioned the blow for low-income Manitobans and exempted certain goods and services from the new tax.
Some businesses — such as residential landlords, daycares, private personal-care homes, financial services firms and most non-institutional health and dental service providers — would be worse off under tax harmonization because they provide exempt services and are not eligible to claim input tax credits. They would pay more sales tax due to an expanded base of taxable items.
– Source: Manitoba Finance
Manitoba makes case against HST, says would cost consumers millions
By Chinta Puxley (CP) – 2 days ago
WINNIPEG — A Manitoba government report says harmonizing provincial and federal sales taxes would save the province’s businesses $510 million a year but cost consumers more than $400 million.
The average consumer would pay hundreds more for everything from gasoline to home heating to haircuts, says the report, which seeks to justify why Manitoba continues to resist the call of a harmonized tax.
The province itself would lose out on $134 million in annual revenue, says the report released Tuesday.
“Manitoba does not support harmonization at this time because of the potential risk to the economic recovery and the burden it would place on Manitoba families at a time of economic uncertainty,” it says.
“Manitoba recognizes that the pace of the global economic recovery continues to be slow and that any decision to harmonize must be considered with particular attention to this economic reality.”
Manitoba is one of the last provincial holdouts – along with Saskatchewan and Prince Edward Island – when it comes to harmonizing sales taxes. Ontario and British Columbia are phasing in the harmonized sales tax next July. Alberta has no provincial sales tax.
Finance Minister Rosann Wowchuk said it doesn’t make sense to impose a new sales tax at a time when the economy is still in recovery.
“We’ve reviewed it and we are not doing it now,” Wowchuk said. “The money that the federal government is offering on a one-time basis does not even cover the additional costs. We aren’t prepared to do that.”
The report suggests businesses would benefit from bringing in the HST and could pass those savings on to consumers. But the report also predicts the savings probably wouldn’t be enough to offset the increased burden placed on consumers, who would pay more for items now exempt from federal sales tax.
“Prices faced by consumers would likely rise in the short term as tax costs are shifted to consumers, but economic research suggests prices may decrease by up to one per cent as savings to businesses are passed on to consumers in the long run.”
Those with an average household income of $63,300 would annually pay $161 more to gas up the family car and $35 more to heat the family home, the report estimates. Family entertainment would cost an extra $63 more while haircuts could cost $30 more a year.
New homes would also cost more – up to $17,500 in HST for a $250,000 house. Tenants could also end up paying more in rent, the study suggests, since landlords would pass on their increased costs.
Proponents of a harmonized sales tax have argued that Manitoba will lose jobs and the provincial economy will suffer if there isn’t such a tax. Business groups say an HST makes the province more attractive for businesses who would save taxes on goods they purchase.
But the government report points out that Manitoba’s main trading partner is south of the border.
“Our main trading partner, the United States, applies a welter of RSTs at the state and local level and does not have a (tax) like an HST.”
Manitoba businesses have benefited from the province’s tax cuts and can be “supported with tax relief that does not burden consumers with the increased costs of an HST,” the report says.
Even with one-time federal compensation, the province also can’t afford to shell out $400 million a year, which would be necessary to cushion the impact on consumers through exemptions, the report says.
Although Manitoba is ruling out bringing in the HST for now, Wowchuk hinted that could change down the road.
“But for us, right now, this is not the step to take because we think it would be a very heavy burden,” she said. “It would cost the province more money than would be gained from it.”