A study reported on today in the Financial Post indicates the implementation of HST did not significantly inflate consumer prices. As time progresses, it appears that businesses are passing cost savings associated with HST input cost credits onto consumers.
“With the compensating income tax changes also enacted by the Ontario government, the net impact of the reform for most families by the end of 2010 was a gain or very small loss in after-tax real incomes,” Mr. Smart said in the report.
It would be interesting to examine the distributional impacts of the implementation of GST on families at different levels of income. In my mind, if the GST was accompanied by an appropriate increase of GST credits for low and medium income households, the tax could improve their standard of living.
The next step required in my mind is to start a process of replacing payroll taxes with consumption taxes. It is illogical to me to levy a tax on employment of low and medium-income earners. At the same time, it would really be nice to return Employment Insurance to a genuine income insurance instrument instead of acting as a tool of wealth transfer from one region to another.
