Ontario must use Quebec harmonization model

Harmonization is a flawed concept but jobs must be protected if Ontario adopts such a policy, says Warren (Smokey) Thomas

Toronto (3 April 2009) - Hundreds of jobs will be lost in Ontario if the province fails to follow the Canada-Quebec model for harmonizing the federal and provincial sales taxes, says the Ontario Public Service Employees Union (OPSEU/NUPGE).

In a letter released today to Ontario Finance Minister Dwight Duncan, union president Warren (Smokey) Thomas says OPSEU is totally opposed to the concept of a harmonized sales tax because such taxes provide "a massive subsidy for those who can afford to pay significantly more" in taxes through a progressive income tax system.

However, if Ontario persists in going forward with a blended tax system it must use the model negotiated between Ottawa and Quebec when the taxes were harmonized in that province. Under an agreement between the Canada Revenue Agency and Revenu Québec, provincial employees are given the responsibility of administering the new combined tax arrangements.

“(This) model may be the best to preserve public service jobs in Ontario,” Thomas wrote.

In a Memorandum of Agreement signed March 9 with Jim Flaherty, the federal finance minister, Ontario has agreed to transfer responsibility for the administration of retail sales tax services to the new, harmonized tax system operated by Ottawa.

OPSEU fears this arrangement will cost Ontario hundreds of good positions, particularly in economically pressed areas like the Durham Region where the ministry’s main office is located. This area has already been devastated by the crumbling auto sector.

More than 1,200 provincial taxation employees audit, inspect and provide operational services to support the administration of the provincial retail sales tax across Ontario.

If the Ontario plan is not changed, Thomas says, women will bear the brunt of job losses when the two systems are blended on July 1, 2010, since women make up the largest portion of jobs in administrative support positions.

This also happened in 2007 when Ontario transferred corporate tax administration services to federal authorities. At that time, more than 80 provincial jobs were lost. Losses under a blended sales tax will be much more harsh, Thomas warns.

“The wages and benefits of front line Ontario public service workers who administer the provincial sales tax are vital to the local economy. It is counter-intuitive in the extreme to undermine the community economic stability that flows from public service investments, particularly the ministry of revenue workforce," he says.

Thomas is asking to meet with Duncan at his earliest convenience to discuss the case for following the Canada-Quebec model of tax harmonization.

The National Union of Public and General Employees (NUPGE) is one of Canada's largest labour organizations with over 340,000 members. Our mission is to improve the lives of working families and to build a stronger Canada by ensuring our common wealth is used for the common good. NUPGE