Back with John Wilkinson as PA to Revenue Ministry
Tax reform that makes Ontario stronger

There was a shuffle of Parliamentary Assistants in late January. I was moved from Tourism to Revenue. Once again, John Wilkinson and I are teamed up, this time to get the government's comprehensive tax reform package explained from one end of Ontario to another.

In my first chat with John, and with the ministry's Chief of Staff, they both made it clear that my experience in public relations, and the fact that I am comfortable in front of a group of people, are key reasons for my joining the Ministry.

As Ontario implements the tax cuts and sales tax harmonization, doing the right thing is one thing. Explaining it is what separates successful policies from the rest. And if not now, then when would be a better time to lower provincial income taxes for those at the low and middle-income levels? If not now, then when would be a better time to make Ontario a much more attractive place for a business to relocate, or for Ontarians to start a business in their own province? If not now, then when would be a better time for retail prices to begin a short, sharp decline as the effect of taxing, re-taxing and re-taxing that is the hallmark of an obsolete, expensive, inefficient, and cumbersome instrument like the PST is abolished?

Each year, I do my Winter Walkabout in the western Mississauga retail sector. This year, I visited some 1,000 retail outlets of all types in Lisgar, Meadowvale and Streetsville. I can say with confidence, using a sample size of nearly 100 percent of all retail businesses in our riding, that most people had "okay" years. They made money, but things could be better. There are more store locations vacant than there were last year, and some people I have called on as I have done the annual holiday visits are not there any more. A surprising number of retailers say they had very strong years, some of them record years, in 2009. Everyone is looking at 2010 to be a year of progress for them, for their employees and for their business.

For most retailers, the effect of sales tax harmonization (which means for all practical purposes that the Ontario 8% PST disappears completely at midnight on June 30th, and the federal GST goes from 5 to 13 percent on most items) will be scant. I've advised retailers to manage their inventory carefully, and track their PST expenses, as well as work out a plan with their accountant.

Retail prices will gradually come down as the tax savings and cost savings from their suppliers come through as lower wholesale prices to the retailer, and then lower retail prics to the consumer. Experience in the 130 or so other jurisdictions worldwide that have adopted such a value-added tax shows that about 80 percent of the tax savings "flow through" to the final consumer within about a year. That figure rises to some 90 percent within two years, and within four to six years, all of the savings are in the hands of the consumer, or end-user. That's why Ontario's transition payments only need to last a year. About five-sixths of all the things you normally buy should either stay the same in price, or come down a bit. The balance should either stay the same, or go up a bit.

At the beginning of 2010, your Ontario personal income taxes went down (by about a sixth for most people) permanently. Business taxes went down too. Most retailers -- indeed most businesses in general -- will make more money just by doing the same business volume they did in 2009, and by nearly all personal accounts to me in the past few weeks, our businesses have much higher hopes than that for 2010.

When all your bills and taxes are paid, an estimated 93 percent of Ontarians will have more money in their pockets.