From: cmk@athena.mit.edu (Charles M Kozierok)
Subject: Re: Death of Canada (Was: Death of America) [long]
Organization: Massachusetts Institute of Technology
Date: Wed, 16 Dec 1992 23:36:09 GMT

In article <1992Dec15.175813.490@mdivax1.uucp> robinson@mdd.comm.mot.com (Jim Robinson) writes:
>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 never denied that the tax "replacing" the MST had some advantages.
i just denied that the advantages outweighed the disadvantages of the
extra taxation involved. that's all. AND the deceptive way it was introduced.

>>>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.

granted. i approve of replacing any tax that unfairly penalizes canadian
manufacturers. as long as it is not a tax increase insidiously tacked on.

>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.

i agree. i only picked on Gary's lame attempt to defend it.
i would be more than happy to let it drop. we have bigger fish to fry.

>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.

amen.

unfortunately, it is most likely too late.

--
charles
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