Friday, December 04, 2009

Does The HST Detract From Provincial Autonomy?

Ontario First Nations are losing their point of sale PST tax exemption under the new harmonized federal/provincial sales tax (or it will become more difficult to apply for; I'm not quite sure which). Dalton McGuinty is, basically, pleading with the Harper government to rig things up as per the status quo when the new tax comes into effect(ie the FNs remain exempt), and Harper et al are basically saying "no".

Since the provincial portion of the HST is redistributed from the Federal bureaucracy to Ontario under the terms agreed to in the legislation,what happens if Ontario decides to make changes to their sales tax--drop or raise it a point, add to or withdraw exemptions? Does this now require federal approval--that is, a negotiated change to the legislation? In other words, is the province handing control of this particular tax policy lever over to the Federal government?

I dunno. Not sure I like the idea, though.


Koby said...

"Dalton McGuinty is, basically, pleading with the Harper government to rig things up as per the status quo when the new tax comes into effect(ie the FNs remain exempt), and Harper et al are basically saying "no"."

Good for Harper. That is the way things should be.

Robert G. Harvie, Q.C. said...

It is somewhat interseting, ignoring party politics for a moment, how the Provinces have so easily given up so much of their constitutional autonomy.

Back in the day, before the Charter, "Constitutional" issues revolved the former British North America Act, specifically, sections 91 and 92.. and the separation of powers.

And the Provinces fought hard whenever the Federal government started to step into their jurisdiction..

Now it's like they welcome it.

The Federal government, Conservative and Liberal, stacks the judiciary, and then, little by little, the Courts authorize the intrusion of Federal government into Provincial affairs - the Gun Registry being a great example.

Owning a gun is truly a matter of "property and civil rights". But, the government argues, guns are dangerous, so really, it's a matter of "Criminal Law".

Yeah, right.

And this foray into "national daycare". No one has argued about it, or even, near as I can tell, raised the issue..

So - now, Ontario and B.C. wish to enter into formal arrangements with the Federal government to harmonize GST and PST.

I don't think the Feds have an right at all to require the Province to do this, nor to require the Province to remain within it.. and I suspect that the Feds, as well, cannot collect MORE than the GST, such that if the Province amends the PST, the total HST will go down - just as it will if the Feds reduce the GST..

What the Feds can, and will do, however, is hold strings to funding transfers. They could, for example, suggest that they will divert tax dollars to those Provinces who are cooperating in a "harmonization" scheme.. to offset joint responsibilities or some such thing.. but, as they do with health care, they will basically create a dependancy, and then use that dependancy to lead the Provinces around by the nose..

Do this or you don't get any $$.

Because I'm in Alberta, I'm not too concerned about it.. however, if I were in a PST jurisdiction, for business, in the long run, it would be much easier to collect at one point rather than running two very different schemes for tax collection.

And the problem with aboriginals is a good example.

Personally - I say, too bad. You are already entitled to tax-free status, and if, to get it, you have to mail in a rebate form, well, boo freaking hoo.

The problem, however, is the harmonization is going to allow for an immediate tax grab - clearly that's why McGuinty is so happy about it. If he was halfway decent, however, he would have dropped PST by a point to offset the added new items caught by the HST.

I wouldn't hold my breath on that, though.

Clearly, however, consumption taxes are the most democratic form of tax we have.. and so, for the economy, if the Ontario government and BC Government was gonig to "grab" tax money - better with an expanded sales tax.

Raging Ranter said...

If it represented any serious threat to provincial autonomy, Quebec would never have harmonized. Quebec is the one province that insists on collecting its own income tax, yet they allow CRA to collect their sales tax for them.