The View from the West

Winnipeg Free Press - PRINT EDITION

HST good for retailers and consumers

By: Lanny McInnes

20/11/2009 1:00 AM | Comments: 1

The rhetoric is thick and battle lines are being drawn -- are you for harmonized tax in Manitoba or against? The debate around this issue seems to have taken on a life of its own.

Let's take this debate to its most basic level -- Manitoba can't afford not to harmonize without risk of being left behind by the rest of the country and putting our local retailers at a severe competitive disadvantage to those in neighbouring provinces and in the U.S. To hold back is bad for retailers and bad for consumers.

By July 2010, 80 per cent of Canadians will be buying and selling products and services under HST. New Brunswick, Newfoundland and Labrador, Nova Scotia, Quebec, Ontario and British Columbia will all have moved to a harmonized tax.

That means retailers across the country will be benefitting from lower costs due to the provision of input tax credits and a decreased administrative burden.

Why should Manitobans care? Retailers in provinces with harmonization will have the benefit of lower costs making them more competitive, efficient, and in a better position to pass those efficiencies onto the consumer. Why would we not want the same for Manitobans?

Job seekers in the province will also benefit from the cost savings for business. With more money being reinvested in their business rather than into handling tax collection, retailers will be stronger and more likely to grow -- and growth means jobs.

Now that we've gotten past the basics, let's get to the products that are currently PST exempt for which consumers fear they will now pay an increased tax.

As we've seen in other provinces that have moved toward harmonization, it is within the government's powers to exempt certain products. As has happened recently in Ontario and B.C., the Retail Council of Canada believes that the government should include in their plan exemptions for products such as books, footwear, children's clothing and feminine hygiene products among others.

The government also has it within its powers the means to reduce the impact on consumers through income tax reductions for low and middle-income Manitobans as well as a number of additional credits and exemptions they can offer.

Although retailers believe tax harmonization in Manitoba is a positive and needed step, there is one caveat -- that the tax should remain visible at the point-of-sale.

A number of jurisdictions have looked at the possibility of "tax-inclusive" pricing. If this happens, all bets are off.

The cost of hiding the tax will wipe out any savings in addition to fragmenting the domestic market by forcing national and regional retailers to show different prices for the same product, depending on the province where it is sold.

So the question now is: how can Manitoba afford not to harmonize?

Lanny McInnes is director of government relations and member services (Manitoba) for the Retail Council of Canada.

Republished from the Winnipeg Free Press print edition November 20, 2009 A15

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1 Comments

Posted by: Buck9

November 20, 2009 at 8:59 AM

It is a fallacy that businesses will
pass on HST "savings" to consumers.
A convenient untruth, if you will.
It certainly may be postulated that
the shoring up of lost revenues from income trusts
is likely the reason for the big push
on the HST. There are similarities.
One is that Jack Mintz is once again
providing faulty supporting research.
And Don Drummond is giving his assent. Another is
that Harper and Flaherty are the initiators.
It brings to mind the adage that
one mistake leads to another and another!
The Cons are relying on an unsuspecting
public to buy into their nonsense, once again.
P.S. Unlike Mr. McInnes, I am not employed
by an organization that would
influence my views.