Newsgroups: talk.politics.misc
From: robinson@mdivax1.uucp (Jim Robinson)
Subject: Re: Death of Canada (Was: Death of America) [long]
Reply-To: robinson@mdd.comm.mot.com (Jim Robinson)
Organization: Motorola - Mobile Data Division; Richmond, BC
X-Newsreader: TIN [version 1.1 PL8]
Date: 15 Dec 92 17:58:45 GMT

Charles M Kozierok (cmk@athena.mit.edu) wrote:
>In article <1992Dec14.180502.6147@mdivax1.uucp> robinson@mdd.comm.mot.com (Jim Robinson) writes:
>>Charles M Kozierok (cmk@athena.mit.edu) wrote:
>>
>>>i don't know about that. i *do* remember being in ontario and hearing
>>>the retailers absolutely SCREAM about the extra cost and red tape required
>>>to have two separate taxes on their sales registers and to administer
>>>the extra tax.
>>
>>The provinces can harmonize their PSTs with the GST whenever they want.
>>Mostly for political reasons they have chosen not to do so.

>ah, but we were discussing Gary's claim that the GST had some beneficial
>aspects to retailers. whether it is the federal or provincial governments
>that made the retailers lives miserable makes no difference to me, nor
>did it to them. i know for a fact that the ontario government made it
>*very clear* to ottawa that they would not co-operate, in advance of the
>GST.

Nonetheless, it is not the GST, per se, that is now making the retailers'
lives miserable, but rather the disagreement of the two levels of
government. Each level has a legal right to implement a sales tax/VAT.
That they cannot work together is indeed lamentable. If the retailers were
smart they would be lobbying both levels of government to get their act
together - However, I do not believe this has been the case. However, as a
consumer I favour a tax that I can "see".

>>> i also remember them worried, justifiably,
>>>about consumers choosing to deal with their spending power
>>>reduction of 7% (actually 7.5% to be technical) by reducing their
>>>spending by a like amount. why do i need to read a book on retail price
>>>composition? hardly seems relevant.
>>
>>If memory serves, the 7% GST is taking in about $18 billion per year. The
>>13% (or thereabouts) *hidden* MST used to take in somewhat less (one or two
>>billion).

>now if that was Gary saying that, i'd not be surprised, because he has done
>this once too often. i'll assume you weren't trying to mislead the readers
>(as Gary is). if the old tax was $1-2 billion, and the new tax is $18
>billion, the old tax did not take in "somewhat less" -- the new tax is
>between 800% and 1700% higher than the old tax, depending on if you
>use the $2B or $1B figure. and this was my essential point in response
>to Gary's lame attempt to justify the GST as a replacement for the MST, 
>a line he quoted directly from the government bureaucracy, and dropped
>like a hot potato after i forced him to try to defend the math.

The one or two billion is one or two billion less. I was perhaps not
entirely clear in my writing. In other words, the GST (generating about $18
a year in tax revenue) is taking in a couple of a billion dollars more than
the MST used to.

>>IMHO, replacing the MST with the GST was a necessary
>>tax update which reflects that changing nature of the post-industrial
>>economy.

>close. it was necessary to support the federal government's outrageous
>social spending agenda. i have already posted numbers to this effect.

[and futher down]

>>However, the GST is probably one of the fiscally sane, although immensely
>>unpopular, things that the PCs did. If you want the goodies, you have to
>>pay for them, and the GST is a better method of paying for them than the
>>MST was.

>that's more like it!
>"paying for goodies" is right. *not* "reflects the changing nature od
>the post-industrial economy".

The reason I believe that the GST makes more sense than the MST is this:
The MST was instituted at a time when manufacturing was the driving force
behind the economy and the service sector was relatively small (sorry, no
numbers to back this up). Thus, it was fairly reasonable to tax goods but
not services (assuming you accept the need for some type of sales tax).
However, since that time the service sector has grown, and as we move into
the post-industrial era it will continue to grow. Meanwhile the
manufacturing sector will decline. Thus, if one wants to achieve the same
revenue flow, it will be necessary to either increase the MST horrendously,
or to "spread" the tax. Most economists seem to agree that a wide tax base
with a relatively low rate (we can debate whether 7% is low) is preferable
to a narrow tax base with a high rate, as the latter tends to skew the
economy and basically screw up market forces more than the former. Thus,
economically speaking, a goods and services tax at a "low" rate is more
benign than either just a goods tax or just a services tax at a "high"
rate.

Listen, I am just as worried about the spendthrift ways of governments of
the last 20 years as the next person, probably more so. However, picking on
the GST seems to be the wrong way to go. The GST makes economic sense.
Just about every industrialized country in the world has a VAT-like tax.
And, by allowing ourselves to be detracted by the opposition parties on
this issue (not surprisingly neither the NDP or the Liberals have said
exactly what they would replace the GST with), we let all the parties off
the hook on what should be the *real* issue - fiscal responsibility.

Fiscal responsibility is what the parties should be talking about. But
they are not, except for the occasional mom-and-maplesyrup remark. I am
probably the person Gary referred to in a previous article as a "Reformer
from BC" (disclaimer: I am not a member, I am strongly considering voting
for them). The Reform Party seems to at least understand that left to
their own devices voters will demand free lunches and  governments will
oblige. It is that type of understanding of human nature that I want the
parties to address and seek remedies for. That they have not (even 
Reform's proposal is rather wimpy) worries me as I see no real hope for
fiscal responsibility without true structural change. In this light, I see
the GST vs MST issue as just small potatoes.
-- 
Jim Robinson
robinson@mdd.comm.mot.com
{ubc-cs!van-bc,uunet}!mdivax1!robinson

Newsgroups: talk.politics.misc