Defending the HST

So a lot of people out there are telling you that the Ontario and BC governments are raising your taxes. How you ask? The HST they tell you. Your (un)friendly neighbourhood curmudgeon is here to tell you otherwise. The HST will save businesses money. The HST will increase investment in Ontario and BC. The HST should drive consumer prices down overall.

First, a bit of a history lesson. The Ontario and BC governments announced plans to harmonize their provincial sales taxes with the federal goods and services tax to create a combined tax; the harmonized sales tax (HST). Everyone panicked and got all up in arms thinking the price of goods and services in Ontario and BC will go up. These people are ignoring the fact that harmonization already happened in New Brunswick, Nova Scotia, Newfoundland and Labrador, and Quebec. And the overall consumer prices in those provinces are no worse off than they were before. A study by Michael Smart for the CD Howe Institute suggests otherwise; consumer prices fell. But most people west of Quebec fail to recognize there is anything east of Ottawa and began to create anxiety with wild stories of tax hikes and Armageddon.

The truth is the HST is going to be good for all of you. First, the cost of doing business in Ontario and British Columbia is going way down. Business owners currently pay 8% PST in Ontario and 7% PST in BC on items consumed in operating their business; generally anything that is not directly resold or further processed or manufactured. That 8% and 7% is not currently recoverable. Post harmonization, the PST going away and is being replaced, for the most part, by the fully recoverable HST. Most businesses will pay a combined 13% or 12% and will be entitled to an equal and offsetting credit. That means there will no longer be any unrecoverable sales taxes payable by businesses. So, businesses save money.

The tax savings realized by business will lead to more investment. With more money in hand, businesses will be able to invest more in new technology and new people. We will all benefit. It's the trickle down effect, the money businesses save and invest lead to more money for other businesses and that trickles down to me and you (hopefully more to me).

It is true that consumers will initially pay more direct sales tax than we currently do as things like houses and services are subject to tax at 13% in Ontario or 12% in BC rather than the current 5% GST rate. However, those houses and services have an indirect tax component (the 8% PST in Ontario and the 7% in BC) that we currently don't see, so the true tax increase is probably more like 2% (based on a study performed a long time ago in NFLD that I cannot share with you). That indirect tax is removed and, provided vendors pass those savings along, the true impact won't be that bad.

Now there are problems, of course, like charities, colleges, universities, hospitals, etc. will pay more taxes and they generally don't recover the HST they pay in the same way as ordinary businesses. I've studied the impact on a few of these organizations and found that, due to a gracious HST rebate mechanism, they will in fact be better off. This may not be true for all, granted, but I assume that the Province will provide additional funding for those organizations that it is required to fund.

I haven't gone into hardly any detail here (BTW, this is my area of expertise), but I hope to make two points to all of you. 1) it's all going to be OK, in fact, it will probably be better after the first few years; and 2) if you run a business, pass those Ontario PST savings along. This is crucial to all of us.

One final point on whether or not the HST is a tax hike. Ontario and BC are losing their PSTs; the HST is a federal tax. While there is a complicated formula that creates a transfer payment from Canada to Ontario and BC, the truth is, harmonization will result in Ontario and BC collecting less tax, even with the transfer payment. This is not a tax hike folks, it is a reduction in overall taxes collected. Look it up, it's in the Ontario budget papers. The reason to harmonize it is to increase investment in the provinces and make the provinces more competitive in the global marketplace.

Now, sit back and relax. It's going to be OK. The world didn't end in the Atlantic Provinces and Quebec and it's not going to end in Ontario and BC.

Halifax Trip

I've been really bad at posting lately. I'd like to say it's because I'm busy, but that'd be a lie. I just haven't been annoyed that much recently. Sure there are a few things here and there, but nothing that makes me want to go off on somebody or something. I am working on a continuing series of rants and I have the ideas in my head, I'm just having a hard time putting pen to paper.

Anyway, enough with the excuses. This post has a very small curmudgeon quotient but I had to share a few things with you from my trip to Halifax this weekend. It was my cousin Dr. DJ AA's stag party. We went fishing, played poker and drank copious amounts of Propeller Pumphouse SOB (highly recommended). I have nothing bad to say about the event at all, though losing to SOB Dr. DJ AA with A-A-6-6-J to A-A-6-6-K spoiled the night until the next shot of Occidental.

What I want to share with you is two of the craziest things I've ever seen at an airport and a warning about travelling. Dr. DJ AA (it may in fact be DJ Dr. AA, I'll have to ask him) was dropping me off at 10:30 am in the morning. I opened the door and got out of the Caravan (or Voyager, again I'll have to ask) and see a man standing just beside the van with his back to the airport wall. He looks like any other business traveller in Halifax; khaki pants, dress shirt, windbreaker coat folded over his arm, and luggage. Just as I step onto the pavement and am about to turn around to open the back door of the van I hear that distinctive psst sound of a beer cap twisting off a bottle. Then this typical business man begins to down a full bottle of Moosehead (green). I immediately hear Dr. DJ AA begin to laugh and I say "did you just see that" and he says "yep." Crazy. I can't believe I saw that. I realize it's not that hard to believe, but if you had seen it and just realized how business like this guys looked, you wouldn't believe it either. He was all business about getting that St. Saint John brewed lager into him too.

So I'm in the Halifax airport waiting in the security line and about to send a message about this crazy thing I saw when I see another crazy thing. I see a woman, likely in her 50s, walking to the security check. She looks like a business traveller as well. I notice she is pulling her wheeled luggage and see something sparkle. I check out the luggage and the thing has chrome wheels. I'm talking Xzibit pimp my ride chrome wheels. The chorus of "One of these things is not like the other" immediately chimes in my head.

Now for your travel advisory warning. You know when you are leaving a hotel room and you get that feeling that you left something behind. Do not just think "ah, it's nothing, if I did it's likely toothpaste." It could be your Ipod. You could have to call the hotel and arrange for someone to pick it up and send it back to you. You could have to pay what I like to call "the dumb-ass tax."

I hope your weekend was as good as mine.

Sometimes I Hate Grand Lake

Ok, the title isn't entirely true. I love Grand Lake, always. But when I was there last on vacation I saw many things that really grind my gears (technically many things, but one general thing in many forms).

If you've read my blog before you know that I like to think I'm environmentally friendly. Grand Lake is one of those places that make you want to be environmentally friendly. You have a huge beautiful lake, a picturesque back lake, plenty of forest, and even a family of osprey. My girlfriend even saw a deer during one of her bike rides.

I brought my bike with me to Grand Lake to 1) burn off Nana's cookies, cakes and pies and 2) to take in the sights. However I was just a few feet past the camps (their camps in NB, not cottages) and getting into the less populated area of the ride when I saw the first thing that upset me; a Tim Horton's cup. "It's alright", I think. It's just one litterer, or maybe a careless truck driver who's garbage flew out of the truck bed. Then, not even one full pedal of the bike later I see an empty box of Alpine, then a can of Alpine, then a pillow (a pillow!?!), then another Tim Horton's cup. It went on and on and on. The side of the road is littered with litter. It was like watching that episode of Mad Men when they just threw their garbage anywhere while on picnic.

Come on people of Grand Lake. It isn't that hard to find a garbage can. There's one just a few kilometres away in Douglas Harbour. You're ruining what is a beautiful part of the province. In fact, prior to re-branding NB's slogan to "Be...in this place" NB used to be the "Picture Province".

It's no surprise that given this lack of eco-friendliness that the area of the lake that was public (actually privately owned, but generously available for public use) is no longer. The owner decided that they didn't want to put up with the filth that people leave behind (even diapers). It's also no surprise that people ignore the no trespassing signs and continue to use the beach and litter. I implore you NBers and Grand Lakers, stop littering. You're really messing up my bike ride and picture taking. Maybe you think that you alone can't stop garbage from piling up. Well if everyone thought that way we'd end up with a big garbage island somewhere in the Pacific twice the size of Texas. Wait, what? We have one?

If It's Not Scottish It's Crap!

There's been a long fight between Cape Breton's Glenora Distillers and the Scotch Whisky Association. The crux of the fight is the name of Glenora's whisky; Glen Breton. The battle began nine years ago when the Scotch Whisky Association, a representative of Scotch Whisky distillers from Scotland, took action against Glenora for using the term "Glen" in its name. The Association is continuing the battle, asking the Supreme Court of Canada for permission to appeal a lower court ruling in favour of Glenora.

First, some background. Whisky can only be referred to as Scotch whisky if it is distilled in Scotland. This is similar to how only sparkling wine from Champagne in France can be referred to as Champagne. Glenora does not refer to its whisky as Scotch whiskey, they refer to it as a Canadian single malt whisky. But the Association fears that including "Glen" in the name of the whisky will mislead potential international buyers into thinking the Whisky is, in fact, Scotch.

This is stupid on many levels. First, the word "glen" has no direct link to Scotch other than the common, and, to be fair, almost specific practice among Scotch whisky distillers to name their product Glen something; Glenmorangie, Glenlivet, Glenfiddich, Glendronach, etc. But a glen has no specific link to Scotch. A glen is a valley. So why should Scottish distillers have a monopoly on the word "glen"? There are glens all around the world. A quick Wikipedia search will show you glens in New York State, Ireland, Canada, and Australia.

Next, the reason they are objecting makes zero sense to me. Scotch drinkers are notoriously snobby. They are the snobbiest drinkers I know. They generally won't buy a bottle of blended Scotch whisky let alone a bottle of whisky that isn't even Scotch. While this may not be true for all Scotch drinkers (and especially the cheap Mills'), most Scotch drinkers take their whisky very seriously. They know exactly what they are buying before they buy it. They can even tell you the difference in flavour and aroma between two Scotches from different regions. It is very unlikely that they'll mistake a bottle of booze from Cape Breton for a bottle from Scotland.

But to make extra sure that a buyer isn't confused, the label on the bottle specifically identifies the contents as Canadian single malt whisky. Caveat emptor anyone? Buyer beware. If you are stupid enough to think a bottle of whisky from Cape Breton is Scotch, then you deserve to buy the crap. I have yet to try Glen Breton, but I assume it's crap, because it's not Scottish.

Is it misleading to call a Canadian single malt whisky Glen Breton? Well, I suppose if you have no idea about Scotch, you may be mislead, but then again, you probably won't be buying Scotch anyway. So I see no harm whatsoever.