"From time to time we are called upon to do things in positions of leadership, which are not necessarily easy, but in our heart of hearts we know that they are the right kinds of things to do," he said.
Analysis: HST issue toxic — handle with utmost care
November 28, 2009
Robert Benzie
Blending federal and provincial sales taxes is perhaps the most toxic issue in Canadian politics, one with the potential to derail both Prime Minister Stephen Harper and Premier Dalton McGuinty.
Conversely, the 13 per cent harmonized sales tax – improbably supported by Bay Street, food banks, neo-conservatives and left-wing economists – also dogs federal Liberal Leader Michael Ignatieff and provincial Progressive Conservative Leader Tim Hudak.
Harper and McGuinty negotiated the deal last winter that will see Ottawa transfer $4.3 billion to Ontario in exchange for melding the 8 per cent provincial sales tax with the 5 per cent federal GST as of July 1.
Most of that money – $4 billion – will go toward rebate cheques of up to $1,000 for low- and middle-income people to offset higher levies on heating fuels, gasoline and hundreds of other goods and services.
In exchange, the federal government, which is also blending the GST with British Columbia's 7 per cent sales tax, moves a giant leap closer to the long-held dream of a national value-added tax.
Until this week, Harper's Tories were happy to leave McGuinty as the face of the HST in Ontario and the premier has obliged.
"A harmonized sales tax together with our package of tax reforms is going to lead to 600,000 more jobs over the course of the next 10 years," he said Friday in Ottawa.
McGuinty's cheerleading of the HST, however, has cost his Liberals support in public opinion polls.
The major beneficiary has been Hudak, who broke with Harper's Conservatives on the tax for political reasons rather than any ideological opposition. (Both federal and provincial NDP leaders Jack Layton and Andrea Horwath oppose harmonization, which they see as a sop to corporate Canada.)
In the past, the PC leader, who has a master's degree in economics from the University of Washington, argued in favour of blending the taxes. Now, he dismisses the business-friendly measure as "a greedy tax grab" and ignores it was the brainchild of federal Finance Minister Jim Flaherty, whom Hudak supported for the provincial Tory leadership in 2002 and 2004.
That Hudak's positioning helps his poll numbers cannot be lost on Ignatieff, whose support for the HST has always been lukewarm.
Indeed, in a 30-minute speech to a Bay Street audience on Sept. 21, the federal Liberal leader never once mentioned the looming tax change.
Only when questioned by reporters afterward did he say he would not scrap the tax agreements with Ontario and B.C.
"It's just not responsible for a party of government to say, `well, we'll tear it up and go back to ground zero,'" said Ignatieff.
Of course, that was then and this is now. Ignatieff's office is now run by some of the same strategists who advised former prime minister Jean Chrétien.
Chrétien artfully exploited the public perception he would kill the GST in 1993, though he never actually promised to do that. He easily won that contest – and was re-elected in 1997 and 2000 – and the GST haunts taxpayers still.
The Liberals were scrambling Friday to avoid staking out a position on legislation on the tax to be introduced next week by the government.
McGuinty finds such dodging and weaving to be tiresome.
"The people of Ontario aren't so much interested in the interplay between the various parties on Parliament Hill, they're interested in their future," the premier said.
"From time to time we are called upon to do things in positions of leadership, which are not necessarily easy, but in our heart of hearts we know that they are the right kinds of things to do," he said.
"I'm counting on all members of the House of Commons ... to understand how important this is to the people of Ontario."
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