HST causes almost 1% Increase in Inflation

Personal Commentary by Darryl Mitchell,

Well, as predicted, it happened! One percent increase in July's inflation rate due to one simple, government lead, taxation change, the HST. Reports today show that the HST implementation in Ontario and in British Columbia have resulted in an inflation break in the Canada as a whole. The inflation rate went from 1.0% in June to 1.8% in July.
But wait a minute. Does that tell the whole story? Is the HST increase not a tax in only two of the provinces? Is the HST implemented on only a few extra services? We already had a Provincial Sales Tax, right? So the small increase in the items and services taxed have little impact on us right? Hmmmmm............ I think not.
The HST itself caused .8% incease in the inflation rate across Canada. So what does that mean the inflation rate increase in Ontario and British Columbia were last month? Two times that rate? Three times? WE may never know since they will never, I mean the politicians, will never give that rate. They are embarrassed to. It is much greater than you think. After all it impacted the inflation rate for the entire country. After all the HST is designed to make a huge decrease in the provincial deficit.
We now have a permanent inflation item in our economy that you and I will pay forever. And we did not even whimper at the new cost item that was wafted at us like a curve ball from Clemens. Oh, you know, Mr. Clemens, arguably the best pitcher to ever pitch in major league baseball. Clemens curve ball is noted to be very deceptive. By the way he did it with hidden steroids, or so they say. So what does Clemens have to do with the HST? They have one thing in common. They had a hidden aspect that we all did not know. In Clemens it was steroids. He lied and used the lie, that he did not take steroids, to gain accolades and a financial fortune. In the case of HST the lie is that it is only a small tax on items that will pay off the provincial debt and only cost us a little pain. Nothing is further from the truth.It is a burden that will last a long time to pay for Government folly such as a picture opportunity called the G20-G8 summit,an  international war, international trips to nowhere and other such expensive ventures that eat away at our personal prospects for the future.
Inflationary pressures are very difficult to stop. Permanent inflationary pressure points, such as the HST, are almost impossible to control especially in the government circles where spending is rampant and uncontrollable. When will HST be increased? Well if you listen to the provincial politicians, never. One time pain for long term gain they would say.
But wait, in eastern Canada, there is already an HST. And, if my recent memory serves me right, they just increased their HST because of tehir budget shortfall. So, the Ontario HST could increase? You bet.
The permanence of the HST and the natural escalation of a so called "progressive tax" such as this are the greatest impact we will see. First, the HST is permanent. It is an immediate increase of cost to all of us that will stay in effect forever. When was the last time you saw a tax decrease? Income tax has gone down, right? Well only partly right. Compare the actual dollars paid by the average consumer in Income Tax today with ten years ago. The difference is staggering. The percentage of the tax has deceased but the amount of actual tax paid has escalated due to the natural inflationary effect of our wage increases over that period of time.
So, although the Federal and Provincial governments have told us they have decreased our tax burden, I question the actual decrease. The effective decrease is not real.
Plus we all should remember that Income Tax was a temporary tax put in to pay for a World War. Temporary? Hmmmm.....
What really burns me as a business person is the financial burden the tax places on businesses. The government gurus who sold the tax to large and small business stated it would remove the tax burden of the Provincial Sales Tax in Ontario from businesses. But wait, what about the collection of the tax? Government has now enlisted a permanent group of tax collectors, the business person, to collect 13% from everything you purchase. They hired these permanent tax collectors for free. Wow! Well not for free since the business person will pay the cost burden.  They not only pay the tax on everything they purchase personally, but also on the extra costs they incur to be a tax collector. The cost of this collection is much greater than anyone has calculated. More capital is required simply to carry the tax through the business. Another group of tax collection staff is required by the business to keep track of the tax. Capital purchases of equipment is required to keep track of the tax. Extra costs and extra burden to businesses. No question this alone will prevent smart businesses to not establish their offices here in Ontario.
So the 8% increase in HST on some items is permanent. It is a permanent burden to our country. what can we do about it. Be vocal. Let people know how much it really is costing you. Let your local politician know. And, finally, let's get ready to change our governments both provincially and federally. That may be the only way they will listen.