Suddenly, the right-wing Fraser Institute pushes out an HST study that aligns with its agenda of ever-decreasing taxes. Is the Fraser Institute's Canadian Tax Simulator some kind of magic box from which we might expect valid estimates?
I question several of its assumptions and conclusions:
1) The Fraser report assumes the HST is at 10 per cent in 2011 - not in 2014, the actual date for the promised reduction.
2) The report does not consider one-per-son households. These households consist mainly of the elderly, the young, and the poor - the demographic that is hit hardest by increasing regressive consumer taxes.
3) The report states that the "cost of business taxation is ultimately passed on to ordinary B.C. families in the form of higher prices." Businesses rarely pass on tax increases or decreases dollar-for-dollar. Competition and other market forces are more important factors affecting business pricing.
4) The report estimates that "families at all income levels will pay more sales tax under the PST/GST."
Recently, the Ministry of Finance released statistics showing that the HST is bringing in hundreds of millions of dollars more than the revenues lost from the business tax reductions.
The report's conclusion that all income groups will experience an overall tax increase, and that the lowest income groups will be hit the hardest if we return to the GST/PST, is absurd.
It flies in the face of the evidence and the common sense inference that a seven per cent tax increase (or even a five per cent tax increase) on a wide range of services and products will produce higher government revenues.
Look at the evidence, not the output from the magic box.
Mike Divine, New Westminster