By John Gallie
The P.E.I. Working Group for a Livable Income opposes the harmonized sales tax (HST) for P.E.I. because it is an unfair tax - it places the burden of the provincial debt firmly on the shoulders of middle-and-low-income people.
The Working Group for a Livable Income (WGLI) is not anti-tax, and would like to make clear our distance from anti-tax lobbyists. Groups whose messages are clearly "no tax," "lower taxes," or "We already pay too much tax" oversimplify the matter and lead people to an irrational conclusion that the only answer is: lower our taxes. This clouds the issue of the need for taxes to pay for public services and to pay those who deliver public services. It distracts the community from the real question of a fair tax system. It justifies the government's preference for tax cuts on high-income earners and corporations.
Our opposition to HST for P.E.I. has stood firm since it was first suggested as Premier Ghiz's remedy for P.E.I.'s economic woes. The current government must accept responsibility for its financial mismanagement of the Island, which has resulted in a scandalous provincial debt. Our opposition to the HST does not mean that we support the collapse of our economy. Our ill-gotten debt must be paid off, but the burden must be borne by those who have benefited from the process of creating the debt. That is certainly not the low-income people of P.E.I., whose situation has become alarmingly worse over the past 10 years. Our repeated questions are: Who profits? Who pays? This means identifying who will do well on HST and who will pay the price.
Just a word about the origin of HST for P.E.I.: the premier's urgency in this matter after "No HST" pre-election talk, made us think that some outside power gave the orders. It is hard to imagine, though, that a premier of a sovereign province of Canada could be coerced, bought off, or both. It is hard to believe that Prime Minister Harper, representing his corporate supporters, could exercise this power. It is very hard to accept that a premier could be so easily enticed by an agreed payout of $39 million. But then there was the little pot of federal dollars that got the Plan B pot boiling. And by the way, poor bargaining must have gone into the HST deal, given that with P.E.I. negotiators accepted a compensation of less than $290 per capita compared to Ontario's above $350 per capita.
This brings us to the way governments exercise mind-control by the words they choose. Calling HST a "progressive tax" gives it a positive spin. "Progressive tax" is a perfectly good economic term, but in the HST case its use is misleading and inaccurate. A progressive tax system is actually one in which those who earn higher incomes pay a higher percentage of their income than those with lower incomes. We oppose HST because it is a regressive tax. It is a consumption tax. It therefore unfairly taxes lower income people who spend all their income (or more) on goods and services, while those with higher incomes put a substantial portion into savings which are not touched by consumption tax.
Creating tax exemptions and/or rebates on selected necessities are simply an attempt to hide the real burden of a regressive tax.
In P.E.I., the business sectors in general seem to be on board. They are assured substantial HST rebates on their inputs, their business supplies. Tax rebates to business will supposedly make P.E.I. businesses "more competitive." It is unclear how this works in actual economic terms and may be just another example of creating a positive spin on this tax by using positive language. "Competition" is something good, right? There is also the promise that business will use the tax rebate to expand and create new jobs. The current record of the corporate sector during this recession shows this to be highly unlikely. Corporate profits have returned to their record high pre-recession levels. Executives are receiving ever-more-generous compensation. Meanwhile, the promised good jobs have not materialized. Corporations are sitting on billions in profits and not investing in the economy or in creating "good jobs."
The P.E.I. Working Group for a Livable Income, of course, does not begrudge the business people any gains they can make from the HST. Our concern is the effect HST will have on lower middle class and lowest income people. It seems that regardless of the data indicating that the HST will have detrimental effects for lower-income people, the government insists that it will be good for "Islanders." The people in the lower-income brackets are Islanders, too. The ‘trickledown theory' - assuming that if the richer classes are doing well, then the lower-income sectors will do better - is a dysfunctional relic of the 1970s. This government needs to be accountable to low and middle-income Islanders' well-being, and implement a truly "progressive" taxation system.
John Gallie of Charlottetown has submitted this for the P.E.I. Working Group for a Livable Income.