The recent commercials that have come on air this week from Team Hudak criticizing Dalton McGuinty for numerous broken promises may have a point. Except for a few problems. Actually there are far too many but I'll mention just three:
- It may well be that McGuinty broke his promise of "no new taxes" and introduced a health care premium like those in BC, Québec and Alberta (the latter of which is now phasing it out). Yet it was Mike Harris who proposed such a levy back in 1994. And I should point out, at a town hall at McMaster which I attended at the time, when I asked Mr. Harris about it, he told me point blank it was fully compliant with the Canada Health Act. Of course, Harris' idea was to have a $50,000 exemption to spare roughly half the families of the province the indignity of having to pay it, and it would have also been progressive with those over $300,000 paying a 3% surtax (McGuinty set the threshold much lower, only $20,000 per individual so most of us get the shaft). However, the feds nixed the idea of the health levy at the time since most provinces were, by law, forced to levy income taxes on a "tax on tax" basis (unlike Québec which has had its own separate system since 1954). It was only when Ontario (led by Harris) and other provinces and territories revolted and threatened to go the Québec route that Ottawa finally acquiesced and permitted the more transparent "tax on income" that we have now. The health levy is here to stay, at least until the budget is balanced. I think we'll instead see an increase in co-pays for drugs and other health appliances for indigents and seniors.
- Hudak gripes about the HST. To a point he does have a legitimate point. Other provinces that introduced it (namely, Québec, New Brunswick, Nova Scotia and Newfoundland-Labrador) reduced the provincial part of the levy to ensure revenue neutrality, something that didn't happen here. What Hudak doesn't want you to know is that Harris, too, was looking at harmonization early on in his first term. One insider (I can't remember who) actually said on CTV that Harris would harmonize if the feds let the province drop their levy from 8% to 3% (which would have meant a net total of 10%). The feds said no, that such a low levy wasn't worth the effort. Personally, I think the combined tax should be 10%. But if Hudak says he'll take the tax off gas, diesel and power, don't believe him.
- Finally, we all have to acknowledge that electric deregulation has been an unmitigated disaster. As it was pending (again, while the Conservatives were in power), several of the largest power users in the province including auto manufacturing, paper making and steel had proposed turning Ontario Hydro into a not-for-profit cooperative that would continue to ensure what the original intent of the system was -- power at cost. Instead we went headlong into a system where most people were forced to pay market prices (the weighted average over two months, with the price changing every five minutes). That would be fine if the average was, say, 10 cents per kilowatt hour. But during those first few months, prices swung anywhere from negative (yes, negative) 5 cents per hour (there was so much being produced it had to go somewhere because you can't store power) to a buck seventy. So instead of paying an average of eight cents like we had been, we were paying anywhere from forty-five to fifty. Embarrassed, the Cons brought back in fixed pricing which means our tax dollars are subsidizing what should be a user pay system. That continues to this day. And yes, there is that debt retirement charge but who's going to pay the debt -- does Hudak think we can just add it on to the government's debt?