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"I guess I’m shocked that Ontario’s opposition parties seem to think that a household earning 188,000 dollars a year can be bribed with only about 100 bucks."

Agreed, and that's what makes the policy so silly. For $350 million, you could give each household a $75 credit (which would make the bottom 50% or so better off than the current proposal). Sure, we can't afford $350 million, but at least that version of this policy would avoid the equity and efficiency implications of exempting energy for home heating from HST. The top 50% wouldn't be worse of under my proposal than under what the NDP/PCs are proposing, but I have a hell of time believing that their political decisions are affected by an amount equal to .02% of their income.

Moreover, at the end of the day, I suspect that the political benefit of providing this sort of broad-based (and for many, largely insignificant) relief doesn't relate to the actual dollar amount so much as the perception of having done something. So when the federal Tories break-out their little boutique tax credits, what matters to voters is not that they're going to get (at most) $75 bucks back for Junior's soccer lessons, but the fact that the federal tories are seen to be doing something for people "like them".

That just comes back to the point I made in the other thread, given that you're going to pander, there are smart ways of doing it and dumb ways of doing it. This is a dumb way.

You said exactly what I was thinking when I read the earlier post. Thanks for putting this out there.

Isn't the whole point of GST/HST to tax everyone AND THEN REFUND THE POOR with a credit? So shouldn't the NDP be advocating larger tax credits for lower income groups or even low and middle income groups?

"I guess I’m shocked that Ontario’s opposition parties seem to think that a household earning 188,000 dollars a year can be bribed with only about 100 bucks."

Rob Ford managed it with a lawyer I know for only 60 bucks.

Bob Smith, I definitely agree that just giving a credit would make more sense. To address Livio's cash flow concern, why not just give everyone a $75 credit and split it across each monthly bill. Any household that does not directly pay its heating bill could claim a $75 deduction.

You talk like the money belongs to the govt and they are doing a favor to the rich/poor whatever. The money belongs to the people that earned it. The govt will just be stealing a little less of it by the hst exemption.

There is a a psychological point here. You see HST money going out of your wallet *every day*. You get a credit, if you do, far less frequently.

Chris,

That's a fair point (although, when we're talking about home heating, you only see HST going out of your pocket every month or other month, depending on your billing arrangement). But, if you get rid of the HST on home heating, you don't "see" the savings (i.e., there's nothing on the bill that says, hey you saved $4 this month on HST). In contrast, with a credit, you get a big check for, say, $75 saying, hey, look what we've done for you.

Now that I think about it, that last reason is probably why the Tories and NDP DON'T want a tax credit. Even if the NDP and Tories enacted (and they probably can't) such a provision over the opposition of the Liberals, when the tax credit checks go out, they'll probably have a nice cover letter saying "This check brought to you by the government of Ontario - Signed Dalton McGuinty". Fairly or not, it's the nature of government that the government takes credit for things done with public money. Far better just to provide a point of sale rebate than to have the McGuinty government sending voters checks every few months or so, even if the policy is a mess.

Then again, on Livio's numbers, for most people they're only seeing

Ignore that last line, I don't know where I was going with that.

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