How Experts Shaped HST Implementation in Ontario

February 28, 2018

Premier Dalton McGuinty’s decision to introduce a harmonized sales tax (HST) on July 1st, 2010 in Ontario was met with widespread opposition. Politicians denounced the move as politically disastrous. Lorne Gunter argued in the National Post that “McGuinty lacks the natural revulsion for higher taxes that most consumers have.” Considering the political challenges, why did McGuinty implement the HST?

Facing a devastating recession in 2008 caused in part by the collapse of the American economy, McGuinty sought out the advice of economic experts, both within the government and in the private sector: “McGuinty was receiving daily briefings on the severity of the economic situation in Ontario” (Lesch 2018, 109). TD Bank released a report warning that an economic collapse in Ontario was imminent unless dramatic steps were taken, identifying “tax reform as a sensible thing that the province could do” (Lesch 2018, 111) to help counteract the effects of a recession. The TD Bank report, compiled by private sector experts, transformed McGuinty’s beliefs so publicly that after the HST was implemented, Jim Flaherty, then President of the Treasury Board, confided with friends that he believed that McGuinty’s “shocking policy shift was because ‘Bay St. had gotten to McGuinty and convinced him’” (Benzie 2010).

The implementation of the HST was as much McGuinty’s idea as it was the idea of experts who defined the solution, problem, and potential punishments for failure. Experts instilled in McGuinty the idea that a disaster was impending and that something significant had to be done. Experts also provided the solution. The TD Bank report, prepared “was critical to McGuinty’s change of heart” (Benzie 2010).

Works Cited

Benzie, Robert. 2010. “Why Ottawa and Queen’s Park Embraced the HST.” Toronto Star.

Lesch, M., 2018. Playing with fiscal fire: the politics of consumption tax reform. University of Toronto (Canada).