However, many CFIB members expect to be negatively affected by sales tax harmonization—particularly those selling products and services not currently taxed at the provincial level. Small businesses in these sectors are very worried about consumer reaction to the price increases they will be required to pass on with the expansion of the sales tax.
As you know, Mr. Chairman, the Fédération canadienne de l'entreprise indépendante is the French name of the Canadian Federation of Independent Business. They go on to say the following—although I do not intend to read everything, given the limited time.
We have heard many comments from members in Ontario and British Columbia that suggest concern that sales tax harmonization will not end up as revenue neutral or a tax reduction, but lead to an overall increase in the tax burden on Canadians.
That is very important.
I would also like to note that there was similar worry on the part of small firms in New Brunswick, Nova Scotia and Newfoundland and Labrador when those provinces undertook similar harmonization initiatives. After extensive consultation with the federal and provincial governments and surveys of our members in the affected provinces, CFIB offered support to the initiative. In our view, two important factors helped achieve small business support for the HST in these provinces.
Here they are referring to New Brunswick, Nova Scotia and Newfoundland and Labrador.
One, there was a benefit to consumers built into the change, as the combined sales tax rates were reduced at the same time as the base broadened; and two, small businesses themselves felt part of the process, as there was a degree of consultation missing from current initiatives. It often surprises public policy makers that small business owners often view things through the eyes of their customers, rather than through the lens of their own business.
That is what we have just seen with the first nations.
And now we come to the crux of their analysis.
I believe the lack of an overall rate reduction partly explains the concern our members have with the harmonization initiatives in Ontario and British Columbia.
Mr. Chairman, unlike Mr. Wallace, you clearly understood the fundamental difference between what occurred when the Maritime provinces harmonized their taxes and what is about to be done in Ontario and British Columbia. For greater certainty, allow me to read the corresponding passages in the English version.
However, many CFIB members expect to be negatively affected by sales tax harmonization--particularly those selling products and services not currently taxed at the provincial level. Small businesses in these sectors are very worried about consumer reaction to the price increases they will be required to pass on with the expansion of the sales tax.
They go on a bit further. Time is a bit short tonight. We don't have as much time as we'd like to deal with this issue, so I'll skip ahead.
We have heard many comments from members in Ontario and British Columbia that suggest concern that sales tax harmonization will not end up as revenue neutral or a tax reduction, but lead to an overall increase in the tax burden on Canadians.
Then he goes on to say--and the “he” in question, Mr. Chair, which I didn't say before when I read it in French, is Dan Kelly, senior vice-president, legislative affairs, at the Canadian Federation of Independent Business--this:
I would like to note that there were similar worries on the part of small firms in New Brunswick, Nova Scotia and Newfoundland and Labrador when those provinces...undertook similar harmonization initiatives. After extensive consultation with the federal and provincial governments....
It should be pointed out again that that's what was lacking, according to the first nations who were here earlier.
...and surveys of our members in the affected provinces, CFIB offered support to the initiative....
--in those provinces, but it doesn't offer its support for the Ontario and British Columbia initiative. That's interesting, and they explain why:
In our view, two important factors helped achieve small business support for the HST in these provinces. One, there was a benefit to consumers built into the change as the combined sales tax rates were reduced at the same time as the base broadened, and two, small businesses themselves felt part of the process as there was a degree of consultation missing from current initiatives.
Of course, as we saw tonight--