“There’s no point putting the gas pedal to the metal from a stimulus standpoint while braking equally hard with the other foot, but that’s what harmonizing the sales tax on housing amounts to,” said association chair Leith Moore.
When McGuinty was asked if he worried about paying a political price for slapping an additional 8 per cent levy on some consumer items, he said: “The minister of finance has got to look at that.”
Duncan was not available for comment yesterday.
Other Liberals were talking, however, and some are afraid the fix is in to do something that may be good economics but bad politics.
“People were reminding Dalton (in the caucus meeting) about the `fat tax,'” said a party veteran, referring to the 2004 debacle when then-finance minister Greg Sorbara considered ending the PST exemption on fast food costing less than $4.
After an aggressive lobbying effort by the restaurant industry, Sorbara and McGuinty backed down. (Harmonization would mean an additional 8 per cent tax on those value meals.)
Another, more hefty tax – the annual health premium of up to $900 a person – was unveiled in that 2004 budget, something that still haunts some Liberals.
“We were reminding McGuinty about the way that was foisted on us,” said one MPP, while another said the premier “has learned a lot from the way that tax was rolled out” and that he consults more with caucus.
“There were lots of questions asked and few answers given,” complained another MPP, adding others in caucus noted the fate of Nova Scotia Liberal premier Russell MacLellan, whose 1997 tax harmonization effort contributed to his defeat in 1999.
“There were a lot of horror stories told,” agreed another Liberal.But government proponents of blending the taxes argue that Ottawa likely will provide some infusion of cash or exemptions to offset the new tax burden. They point out that was the case with other provinces.
A senior federal official said no decision has been made on financial help to Ontario during any transition, but the insider expressed admiration for McGuinty’s boldness.
“It’s politically dangerous. We’re glad he’s looking at doing it, but it could really hurt him,” said the source.
