By Tony DiGiovanni
LO executive director

The Ontario Government announcement that it is moving to a harmonized tax system, beginning July 1, 2010, has alarmed many of our members. Some are asking Landscape Ontario to lead an industry campaign to fight the HST proposals. HST is a blend between eight per cent Ontario tax and five per cent GST.

I don't understand how adding an additional eight per cent tax onto previously exempt services, like landscape maintenance, is expected to stimulate the economy. I was intrigued with the loud support and praise for the HST from the Ontario Chamber of Commerce, board of trade, banks and many other groups.

Before fighting, it is wise to understand why the HST is getting support from groups that regularly support economic development and prosperity initiatives.

Chamber of Commerce
The chamber refers to the HST as visionary (please see http://taxharmonization.on.ca/facts.html). It claims the HST will put Ontario on a path towards increased competitiveness, productivity and economic recovery that will benefit every Ontarian and every business operator in the province. It maintains that the HST will cut Ontario's marginal tax rate on new investment in half.

• The government HST initiative was based on the Chamber of Commerce report. Please see http://taxharmonization.on.ca/files/HST_Report.pdf. The report makes a solid case for the benefits of HST including the following: Savings on business inputs (HST will now be a flow-through much like GST) transitional funding to cover the cost of new accounting and point of sales systems (This is not a benefit. These extra costs are the result of HST)
• Ease of administration (collecting one tax instead of two)
• Elimination of inflated consumer prices, because HST will be collected at each stage of the production process (I don't understand this one. Please let me know if you do.)
• Introduction of a $260 tax credit for low- and middle-income families (This is also counter-intuitive. Why would the government see the need to introduce temporary tax rebates and tax credits if one of the proposed benefits is reduced consumer prices?).

It is interesting to note that the Chamber report suggested exemption options for labour intensive services. The problem is this exemption option was not considered by the government.

The consumer will pay additional tax on just about everything. Logic tells me that customers will probably retreat on spending, because of extra expenses associated with many services. This situation will negatively impact our sector, at least in the short term. At the very least, the government should have consulted widely before introducing such dramatic changes. It also erred in not raising public awareness of the proposed benefits.

It is important to address this issue. Landscape Ontario has written the premier and minister of revenue, asking them to consider an exemption for labour intensive services. We need you, our members, to do the same. I also believe that it is important to frame our comments within the framework of the Chamber report. The report gives us the logical rationale for our position. Here is our letter. Please use it yourself, or to write your own. Ask your employees to do the same. This is an important issue.

July 1, 2009

Dalton McGuinty, Premier
Legislative Building
Queen's Park
Toronto ON M7A 1A1

Dear Premier McGuinty,
Re: Proposed HST

Landscape Ontario represents over 2,400 companies operating in the landscape/nursery/garden centre/horticultural industry. We are writing to register our concern about some aspects of the HST that we believe will be very damaging to our 14 billion dollar sector and to Ontario's economy.

      We are aware of many economic benefits of introducing the HST. The Ontario Chamber of Commerce's report http://taxharmonization.on.ca/files/HST_Report.pdf, as well as the government's own budget releases, put forward a number of compelling arguments for introducing the HST. However, there is one very important issue that you have overlooked. Presently the public does not pay PST on labour intensive services. The proposed HST will add an additional eight per cent burden on many previously exempt products and services, including landscape maintenance services. This will have an anti-stimulus and chilling effect on the public, seriously damaging our industry (and others). Please reconsider how you apply the HST. The Ontario Chamber of Commerce report puts forward an option for a number of exemptions, including labour intensive services. Your government used the report to support your proposal. Please use the same report to consider an exemption for labour intensive services.

This simple act will be welcomed enthusiastically by our industry and the public and will reduce the extensive criticism currently directed towards your government.

We urge you to reconsider the exemption.

Yours truly,