Strategic Thoughts

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September 24, 2009

HST as Federal Election Issue

Will Harper's minority government be able to make the changes necessary in order to implement the HST in Ontario and BC? Conservative MPs are doing everything possible to place responsibility for the federal-provincial deal on the HST solely on the provinces, but it will take an amendment to a federal statute in order to implement the HST.

The legal basis for the GST and HST is found in the Excise Tax Act. Part IX of that Act, beginning with section 122, spells out the goods and services tax. It defines "participating province" as the provinces listed in Schedule VIII of the Act, hence that schedule will have to be amended in order for Ontario and British Columbia to implement the HST. That could be challenging for a minority government.

Stopping the HST at the provincial level requires either a change of heart by Gordon Campbell or at least 8 BC Liberal MLAs voting against the provincial enabling legislation that will be introduced early next year. Neither of those options are as likely as stopping the tax at the federal level by simply getting the three opposition parties to announce that they won't support the required amendment to the Excise Tax Act. Who would have thought that we could have a federal election on the issue of implementing the HST in Ontario and BC! It is unlikely that Harper's Conservatives want that to be the next election issue, yet defeating his Excise Tax Amendment would be a confidence vote that could trigger an election.

Of course the Harper government would survive a confidence vote on implementation of the HST if Ignatieff and his Liberal caucus vote with the government. That is what Ignatieff assured Ontario Premier Dalton McGuinty he would do. The federal Liberals appear to be saying one thing in BC and another in Ontario. Sometime before the July 1st effective date they will have to vote on the necessary amendment to the Excise Tax Act. Let them explain that vote in BC where it will be both a federal and provincial election issue. Ignatieff's support for the HST will likely cost him some seats, possibly including Ujjal Dosanjh who won by only 20 votes after a recount in 2008. No wonder Dosanjh is running around BC trying to make it look like he opposes the HST, all the time knowing that Ignatieff will climb into bed with Harper to make it happen.


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