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Ontario must follow Canada-Québec model on tax harmonization

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Hundreds of jobs are at stake if Ontario moves to blend its retail sales tax with the federal Goods and Services tax, warns the president of the Ontario Public Service Employees Union in a letter released today to provincial Finance Minister Dwight Duncan.

In his letter, Warren (Smokey) Thomas says OPSEU flatly rejects the proposed harmonized tax system. “My members and working people across the province believe such taxes act as a massive subsidy for those who can afford to pay significantly more for quality public services through a progressive income tax system.”

However, if Ontario persists in moving to a blended tax system, then it should follow the model negotiated between Ottawa and Québec City.

Under an agreement between Canada Revenue Agency and Revenu Québec, it is the responsibility of provincial employees to administer the delivery of blended taxation services.

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

Under a Memorandum of Agreement signed March 9 with federal Finance Minister Jim Flaherty, the province has agreed to divest its delivery of retail sales tax services to the new, harmonized tax system administered by Ottawa.

OPSEU fears this agreement will cost the province hundreds of well-paying positions, particularly in economically-depressed areas like Durham Region where the Ministry’s main office is located. More than 1,200 provincial employees audit, inspect and provide operational services in the support of the provincial retail sales tax across Ontario.

Thomas also pointed out that women will bear the brunt of job losses when the federal and provincial tax systems are blended on July 1, 2010, since women make up the largest portion of jobs in administrative support positions. That was the case when the government of Ontario agreed in 2007 to upload the Corporate Tax Administration services to federal authorities. More than 80 provincial jobs were declared surplus as a result.

The threat of job losses to provincial employees under the blended tax proposal will be considerably more harsh, Thomas warned.

“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.”

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