Times-Advocate, 1982-08-11, Page 309aci'a jOitingo
The nature of Ontario taxation
ly jock Rlddell MP/
The decision to refer the
controversial budget bill to
Arnend the Retail Sales Tax
Act to an all -party Legislative
Committee, with the power to
hold public hearings and
recommend changes,
established a precedent in
provincial legislative history.
Of course, the big question
was whether, as a result of
five days of public hearings,
the Ontario government
would permit Liberal amend-
ments to the tax bill to pass
into law.
There were nearly 60 sub-
missions from a wide variety
of interest groups and
organizations, most of which
demanded ' significant
changes in tax policy.
However, Committee hear-
ings proved to be little more
than an exercise in futility
and frustration. Notwithstan-
ding widespread objections,
the government has passed
legislation extending the
Retail Sales Tax to a number
of previously exempted
items.
Ostensibly, the decision to
expand the sales tax base was
prompted by two factors: (1)
an erosion of the present tax
base due to a recessionary
downturn in the economy;
and (2) the added fiscal
burden attributable to a short-
fall in federal transfer.
payments. Several invest-
ment groups which appeared
at the Committee hearings
supported this position.
However, it has also been
argued that it is fiscally ir-
responsible to extend the
Retail Sales Tax, or increase
its rate, without examining
the expenditure side of the
provincial budget.
While the many and varied
groups which appeared
before the Standing Commit-
tee on Resources Develop-
ment expressed their in-
dividual concerns with
respect to the broadening of
the tax ban,there were a
number . '61 common
criticisms.
For example, the majority
of municipalities and school
boards suggested that' their
problems were exacerbated
by the timing of the budget,
since local mill rates and user
charges had already been
established prior to May 13th,
when it was brought down.
An interesting ,point was
raised with respect to school
boards, when it was sug-
gested that an application of
a sales tax to goods purchas-
ed by public sector organiza-
tions represented a surcharge
on a non -discretionary expen-
diture. In other words, the
government is now taxing
items which must be purchas-
ed by these institutions to
satisfy provincial legislation
which sets minimum stan-
dards for fire safety, ade-
quacy of physical plant, and
general health and safety.
School boards (thecon-
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•
sumers) are unable to avoid
paying the tax because the
decision to purchase is one
which is required by
legislation.
In the same way, some
decisions to purchase made
by individual consumers are
based upon necessity, and in
1962 the Treasurer, the Hon.
Jame Allan, states that "by
exempting food, fuel, rent,
children's clothing, book
school supplies and medical
expenses, we have avoided
taxing most of the items that
represent the greatest ex-
pense to families with small
budgets."
At that time, the tax - with
its exemptions - was intended
to bear lightly upon low-
income groups and more
heavily on high-income
groups, in accordance with
the principle of ability to pay.
The 1982 budget radically
departs from this principle,
and as a result low-income
earners and those on fixed in-
comes must pay a larger
percentage of their earnings
for taxes than those who have
a considerably larger income.
Many witnesses before the
Committee referred to the
lack of consultation prior to
the budget - somewhat ironic
in view of the Treasurer's
repeated criticisms of the
federal government in this
connection.
It seems clear that the
budget will weaken if not
eliminate certain sectors of
the provincial economy. If
predictions are fulfilled, we
can expect: (1) the loss of
7,500 jobs in the restaurant
and foodservice industry (2)
loss of 1,000 service repair
jobs due to the labour tax; (3)
possible elimination . of the
catering truck industry; (4)
curtailment of research and
development into alternative.
energies, and loss of future
employment opportunities in
Times-Advoc9te, August 11,1982
Pogo 3
ARLING S
The Place
to
BUY BEEF
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Exeter 235-0420
our developing solar industry.
The n for_ a policy which
widens the consultation pro-
cess is crucial if governments
wish to avoid implementing
budget policies which may
have a disastrous impact on
business and on individuals.
According to the Treasurer
himself, impact studies were
not compiled on any of the
sectors effected by his
budget. Given the testimony
before the Committee, the
risks of not seriously re-
thinking the budget process
are enormous.
•
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