This time in Liberally Speaking, I thought I would mix things up a bit and talk about a provincial issue that has been in the media a lot lately – the Harmonized Sales Tax (HST).

There has been a lot of fear mongering from both the NDP and Progressive Conservatives about this, so I thought a column explaining the issue with all of the information might be a benefit to everyone.

There are several parts to the HST discussion. The most obvious being that instead of the 8% PST and 5% GST being calculated and collected separately, there would be one new tax of 13%.

One of the effects of this is that items with are currently PST exempt, will be charged the full HST, this is effectively an 8% tax increase on these items. If you listened to commentators and some politicians, you would think that this is the full issue. “Just another McGuinty tax increase” blah blah blah.

Even on here, you see commenters with a list they obviously cut and pasted from a London message board (London Knights tickets?) talking about increases to golf fees and hair cuts, making it seem like this was the whole story.

But really, that couldn’t be further from the truth. The fact is that the HST is just one part of a much larger tax reform package.

In order to make the HST work, the McGuinty government has devised a plan to make it beneficial to both consumer and businesses.

First, while there will be some items subject to more tax, the vast majority (over 80%) of goods and services are already subject to both the GST and PST and will have no change.

Secondly, the government is lowering income taxes by 16.5% on the first $36, 848 of taxable income, making income taxes in Ontario, the lowest of any province in Canada.

Additionally, a new tax rebate (similar to the GST rebate) will be made available to families earning less than $160,000 ($1,000 rebate) and individuals earning less than $80,000 ($300 rebate). There are also addition tax rebates and credits for low-income adults and children.

There is also a rebate for municipalities, academic institutions, schools, hospitals, charities and non-profit organizations.

The McGuinty government has basically done everything it can to ensure that nobody will be adversely affected by higher taxes on some products.

Now that I have discussed the tax benefits to consumers, I should talk about why this is a good deal for businesses.

Right now, Ontario businesses are burdened by the outdated two-tax system. The manufacturing sector especially is having a very tough time competing in Ontario and many, many workplaces are shutting down. Tax harmonization is a way to make Ontario’s tax system more welcoming for businesses to open up shop in Ontario.

Businesses in Ontario will save an estimated $500 million a year in administrative costs alone by only collecting and remitting one tax instead of two. That’s half of the paperwork.

The HST also leads to savings on business inputs (such as machinery) to the tune of $5 billion. There is also one-time transitional funding to help businesses with the costs of changing over their accounting systems and point-of-sale systems.

The HST is pretty much universally loved by business organizations (Toronto Board of Trade, Ontario Chamber of Commerce, Retail Council of Canada) and social organizations (Daily Bread Food Bank, Ontario Association of Food Banks, Canadian Centre for Policy Alternatives) alike, two groups with very different interests and constituencies.

If you listen to opposition critics, you would think that this is the worst decision in the history of Ontario. But then again, it depends when you were listening to them. For instance:

“I agree that there’s little sense in allowing two separate governments to apply two separate taxes and policies and collect two separate groups of sales taxes.” Tim Hudak (April 23, 2009)

“I think right now (people) think of a harmonized tax as being an increased tax, you know, period, full stop. That isn't what it is." John Tory (November 14, 2007).

So why are the Conservatives making such a big deal about it now? Pure politics. They see it as an issue that people don’t really understand are and looking to score some easy points. Maybe they are on to something. The recent past has shown that the Canadian public is not really up to highly sophisticated conversations about the intricacies of policy proposals or politics in general. It is easy to score easy points with drive by smears and half-truths. In the end, Dalton McGuinty and the Liberal government has the responsibility to do what is best for the province of Ontario, and that is joining the majority of provinces by harmonizing the sales tax.