Sunday, November 29, 2009

Dalton McGuinty Tightening the Screws on Government

HST would eliminate options for an incoming government

A frequent criticism of Stephen Harper's government in Ottawa has been accusations that they're "tightening the screws" on government.

These were actually
the words of Tom Flanagan, who argued that the Conservative Party's tax cuts would limit the ability of future governments to start new programs.

Now, with Dalton McGuinty's Liberal government about to harmonize their provincial sales tax with the federal Goods and Services Tax -- with the help of Harper's federal government -- the Ontario Progressive Conservative Party, led by Tim Hudak, is opposing the move.

McGuinty seems to have found what he thinks will be his answer to the matter: challenge the Hudak Conservatives to commit to overturning the Harmonized Sales Tax should they form the government after Ontario's next election.

"I think Ontarians would be interested in knowing why it is that the leader of the Official Opposition is not prepared to repeal the HST," McGuinty recently told Queen's Park.

Of course, what McGuinty isn't giving the HST issue credit for is that, if implemented, it represents a negotiated tax agreement between the federal and provincial government. Each government receives a share.

Because the tax represents an agreement between the two government, it hampers the ability of either government to make reductions in that tax.

So, in its own sense, the passage of the HST -- whether it's a sound econcomic policy or not -- represents a tightening of the screws on government, committing the provincee to a particular taxation regime.

There's a very good reason why Tim Hudak and the Progressive Conservatives can't commit to abolishing the HST -- it's because the collaborative nature of the tax limits the options to do so.

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