The Town of Caledon has voiced its opposition to the harmonization of provincial and federal sales taxes in Ontario. Caledon-Dufferin MPP Sylvia Jones supported the opposition and in previous statements to The Enterprise, voiced her own opinions about what she called a “tax grab” by the provincial Liberals.

To balance the opinions however, Ottawa-centre MPP Yasir Naqvi, who is also the parliamentary assistant to Minister of Revenue John Wilkinson, took questions from The Enterprise to explain what he called an important “tax reform” to the people of Caledon.

CE: Critics are calling the HST a tax grab. Is it not?

YN: Well you know, the critics, if you’re referring to opposition, they’re being hypocritical. They are not voting to repeal it (HST), if it’s so bad. Here’s a tax we’re putting in place to make sure Ontario’s economy continues to grow and create jobs. You’ve got a good example that this is in the best interests (of residents) in that the Federal Conservative government, your MP, Diane Findlay all voted for it in the House of Commons, and you’ve got a provincial government working hand-in-hand to make sure Ontario’s government is competitive. Mr. Hudak (Tim Hudak, MPP for Niagara West-Glanbrook and leader of Ontario PCs) and his party were in favour of it publicly, until the day this tax reform measure was introduced in the legislature, and now he’s turning his back to the growth of our economy. Now, there are three things as part of the tax reform package. One, we have cut the income tax for Ontarians as of Jan. 1. In Canada now, on the first $37,000 we earn, Ontario has the lowest tax rate. That benefits 93 per cent of Ontario taxpayers. They will see a reduction in their personal income taxes. Especially low to mid-income Ontarians, and most importantly, seniors and fixed income.

Second thing we’re doing is reducing corporate income tax, especially for small businesses. Small businesses in general drive the economy. And we’re substantially reducing corporate income taxes. And I’ll give you two examples. We’re taking corporate income tax rate from five and a half per cent to four and a half on July 1. As of July 1, we would eliminate the small business surtax, when a small business would make profit, it would face an extra tax, we’re getting rid of that.

And number three thing we’re doing for small businesses. All small businesses pay something called a capital tax, which they pay on their business whether they make money or not. As of July 1, that is gone as well.

Which means, as of July 1, small businesses in Ontario will only pay tax, at a reduced rate, when they turn a profit.

Mr. Hudak and the Conservatives are against that.

CE: What’s the benefit of HST for Caledon residents?

YN: Here’s the scoop on GST and PST. Right now, we have two types of sales tax, five per cent GST and eight per cent PST. On 83 per cent of our consumer spending, we pay five plus eight. It’s only 17 per cent where we only pay five percent.

So, why are we harmonizing? When businesses are doing business in Ontario and they have different inputs into their business, they pay sales tax. They get the five per cent of GST portion back from the federal government. So their cost is zero. They don’t get back 8 eight per cent sales tax. We collect that money. So that 8 per cent becomes a cost of doing business. The only way the business recoups that figure is to pass it off on the consumer. On most of the things, the consumer pays another eight per cent on top of it.

By harmonizing, we are converting GST into PST, which means, as of July 1 in Ontario, they will get the full 13 per cent back.

So for businesses, their cost comes down that much, and it makes them that much more competitive. Their margin increases in terms of profitability, which will allow them to grow the business and hire more people, because that’s what businesses like to do. Or, some businesses may pass those savings off on consumers. We do live in a market economy and price point is a big part if it.

The other big advantage of harmonizing is the simplification of the administrative point of view. Our businesses dealt with two levels of government before, fed GST rules, and PST rules. GST forms, and PST auditors. Everything is different, especially for our small businesses. By harmonizing, we’re totally eliminating one level of government from the business/government interface. The provincial government will no longer be in the business of acquiring sales tax as of July 1.That is an incredible amount of savings for our businesses, especially our small businesses.
We are not the only ones. All experts from all political spectrums, left or right, have said this is the right set of tax policies Ontario has brought forward to bring this province out of recession. That is why the government of Stephen Harper, and the government of Dalton McGuinty are aligned in implementing this policy.

CE: OK, but the AMO (Association of Municipalities of Ontario), opposition critics and a slew of municipalities are voicing complaint about the HST, have they all got it wrong?

YN: Well, I think they are getting swayed in the political debate in this. If they look at it closely, this will help our local economies grow. It will help individuals in our communities get good jobs, because we have to remember, at the end of the day we want people in good jobs, because then they are paying taxes. All those taxes go to providing services we are mandated to provide. I think a lot of municipalities are looking at the short term implications, instead of long term gains.
We won’t start seeing impacts on July 2. But one or two things will happen in the economy, a business will see its margin grow, that business owner will say ‘aha,’ I can get into a new line of business, or expand the business like I always wanted to do. And they will hire someone, or a couple people, and the net impact to the economy is positive. Or a business will say, I’m not competing, but I have this savings, so I’m going to reduce my prices. I have been in business in past, and every time I have made money, I have wanted to grow my business.
Through this policy, we are trying to reduce the tax burden and increase the tax pool.

CE: Our readers are concerned with the list of things that will suddenly have PST on them though. The reduced income tax is nice, rebates are nice, but are we, as Ontarians, actually going to be paying less tax as of July 1?

YN: Yes, because you have to look at (the fact that) they will be living in a stronger economy. At the end of the day, what I’m worried about, is that me and my family members have good paying jobs.