Monday, June 21, 2010

Lie to me, some more - updated

I wondered when folks at the Fraser Institute would weigh in, aiming to convince people that HST is good to great for ordinary British Columbians. That predictable message arrived today. Strangely, a spokesman claims their report gives impartial HST news to counterbalance misinformation being circulated by politically motivated truth tellers. The impartial research relied on for this report was published by the BC Government, their consultant Jack Mintz and the - wait for this - the Fraser Institute and the CD Howe Institute.

We could assume that Niels Veldhuis, spokesman for the libertarian think-tank, was joking when he talked about his organization's impartial, non-partisan, fact based research but his messianic speaking style suggests he might believe his own script. I hope not, real detachment from reality is a symptom of a serious disorder.

Hands up all those who think the Fraser Institute is a good source for a detailed and impartial study of any public policy?  In fact, no matter what the Institute examines, the answer is always the same. Defund government, eliminate taxes on business and investors, remove all business regulations except those that grant commercial monopolies or near-monopolies, trash environmental rules, give public forests to industry, open parks for industrialization, cut social programs and, of course, privatize education, healthcare, mangement of resource extraction and every other activity of government.

Are we surprised that they favor a tax policy that shifts $1.9 billion from business to consumers in one year, perhaps $10 billion over the term of the initial agreement? No. Decidedly, no.

Right wing think tanks want government revenues raised only through consumption taxes and they believe that out-of-country income and assets should be untouched by Canadian tax authorities. If the Fraser Institute policies were applied, Canada's wealthiest elites could earn income here without taxation and do the bulk of their consumption overseas in tax free jurisdictions of their own choosing. And, as written here before, the Fraser Institute is a paid servant of Canada's wealthiest elites.

The Fraser Institute report and Niels Veldhuis, during his promotion on CKNW's afternoon show, provide  their own misinformation such as:

 - When businesses are charged PST on production supplies and capital inputs (i.e., machinery and equipment), productions costs increase and these increased costs are largely passed on to consumers in the form of higher prices.
  • Except that in this province machinery and production equipment is exempt from PST and, of course, businesses acquire goods for resale, and materials purchased to be incorporated into goods for resale,  without paying PST.
  - The only shift is from low income families to high income families.
  • Except that the real shift is from business to middle income families. 
- The reality is that business savings are passed onto consumers.
  • Except that no study has been conducted to support this claim. Most of the PST relief will go to exporters who sell at world prices not according to cost inputs (for example: gas and oil, minerals and forestry). Finished goods imported for resale also contain no PST (for example: shoes, clothing, appliances, etc.)
  - HST will make the tax system more progressive.
  • A strange twist to commonly accepted theory. Consumption taxes penalize lower and middle class families who spend all of their income to subsist so have almost their entire earnings subject to sales tax. High earners spend only a part of their income and typically save a significant portion so sales tax is a smaller proportion of income for the wealthiest earners.
  - HST will lead to more jobs and higher wages.
  • Considering the Fraser Institute's continued objection to raising the minimum wage, I am more than slightly reserved about their promise of higher wages for anyone.  However, according to economist Dr. David Schreck, ". . . some HST proponents acknowledge that the tax encourages substitution of capital for labour and hence has some elements of depressing long run employment growth."
I wonder how the radio staff react to a program like that today on CKNW, which added more sales tax drum beats for the rich and powerful. Most production staff, excepting management and 'celebrities' are part-time, low wage workers without job protection. Christy Clark's temporary replacement, Simi Sara, is on her fourth or fifth employer in the last year, despite being a highly respected, award-winning broadcaster. Automated stations and small staff requirements result in fine profitability for the owners. Somehow, though,  job opportunities decrease and wages remain low.

 If you read through the Fraser Institute report, play this music to ease the burden.



Don't miss EastofthSun for Ian's exchange with Dean Pelkey of the Fraser Institute. A two punch TKO.

The Fraser Institute is quite dishonestly trying to mix tax measures announced in 2008 into the current HST discussion. Ian sets them straight:
"No new tax reductions were introduced at the same time or after the HST in BC. I believe you are thinking about the tax break that was introduced in November 2008 to argue that new reductions were introduced to offset the HST in BC. Do you have special knowledge that the HST was planned as early as November 2008 and those tax breaks were intended as offsets for the HST? Or are you spinning that it should all be mushed together and treated as an offset even though it isn’t?"

Have a look here to see an economist, a real one with a PHD, take apart the Fraser Institute "report."
Recommend this post

8 comments:

  1. Thanks Mr. Farrell...And judging from the phone calls to cknw, the comment section under the Fraser institute story at the CBC...

    No one believes a word from the Fraser institute..

    I read their report, it`s full of flaws, the numbers don`t add up, the report uses many weasel words like should(should)...Very non-committal...And

    Check out all the disclaimers protecting the authors accuracy of their OPINION story, they leave themselves escape clauses through out the report, more on this over at my place.

    Cheers

    ReplyDelete
  2. I think you should read this Norman Farrell, a study by statistics Canada shows that all B.C. households will get hammered by the HST, it totally debunks the Fraser institute study!

    http://www.vancouversun.com/news/households+hard+analysis+shows/3183438/story.html

    Cheers-Eyes Wide Open

    ReplyDelete
  3. Thanks Grant. The Fraser Institute's paper would have earned a D- at any 200 level college course.

    The linked article originated with the Victoria Times Colonist where, I suspect, the Fraser Institute is not so revered. Perhaps Fazil Mihlar, Don Cayo and the other think tank boys were on vacation or at the bar watching football when this slipped through at the V Sun.

    ReplyDelete
  4. What kind of parent would raise a child whose goal in life would be to work at such a firm.

    Henri Paul

    ReplyDelete
  5. Norman, Eyes wide open beat me to the punch. The TC/Stats Can study at least matches the math. David Schreck has an excellent short piece on the importance of the math. I now understand why Hansen has got so mixed up on the revenue neutral statement. If he hadn't confirmed the revenue neutral status of the HST he's be able to spin just about any numbers. Now he, and the Fraser Institute in his wake, have to make the spend do two things - balance out to achieve revenue neutrality and show how 1.9 billion ends up in people's pockets to make up for the HST hit. Not possible.
    And thanks for the shout out.

    ReplyDelete
  6. The Vancouver Sun article is no longer available, though it still turns up in Google search results.

    ReplyDelete
  7. left, right, left, right, left, right....


    LEFT!

    ReplyDelete
  8. Wingnut Welfare - thy name is “Fraser Institute”. Anyone who quotes them should be standing in a soup line.

    ReplyDelete

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