Flaherty’s HST Pitch Fails to Woo Holdouts

(CBC News)

A day after Ottawa offered cash to provinces to harmonize their sales taxes across the country, the few holdouts remain cool to the HST idea.

On Tuesday, Finance Minister Jim Flaherty said Ottawa was willing to offer financial support to provinces choosing to harmonize their provincial sales tax with the federal GST.

Business groups like the idea because they argue it reduces red tape and lowers the tax on investment. But harmonization detractors argue it ends up costing consumers more in real terms because the GST applies to more goods and services than the provincial levy.

Though he stopped short of rejecting the plan outright, P.E.I. Premier Robert Ghiz says it will take more money than Ottawa is currently offering if he is to consider harmonizing provincial sales tax with the GST.

He said the revenue loss to the province must be offset before considering any harmonization proposal, and specifically requested that exemptions be allowed allowed for home heating fuel and clothing.

In P.E.I.’s case, the blended tax would actually be lower. He acknowledged the plan would mean a tax cut for Islanders, but he also wants to ensure the province can afford to protect those most vulnerable, he said.

In Manitoba, a spokesperson for Manitoba Finance Minister Greg Selinger confirmed the province is looking at the offer. The province’s stance has traditionally been against any harmonization plan, but Ottawa’s subsidy offer appears to be enough to at least consider the proposal. Read more here.