Has the Fraser Institute Lost its Way?
JMaddock — September 4, 2010
As we all know, libertarians and free market liberals tend to be skeptical of new taxes. That’s why it surprised me when the Fraser Institute, British Columbia’s leading “free market” think tank, came out so strongly in favour of the Harmonized Sales Tax (HST), which allows the federal government to impose consumption taxes on goods and services that were previously tax-exempt in BC.
I’m not saying that the Fraser Institute’s arguments are completely without merit. For certain industries (such as logging, mining, etc.), the HST will eliminate cases of unfair double taxation that were present under the previous “Provincial Sales Tax” (PST) regime. This should (in theory) lead to an increase in efficiency and create new jobs, which we all know the economy needs right now. Premier Gordon Campbell, in fact, called it the most important step that our province can take to recover from the recent recession.
But the same increase in efficiency could have easily been achieved by exempting business-to-business transactions from the PST and ensuring that sales taxes (federal or provincial) are only imposed at the point of consumption. Sure, this would have resulted in a loss of tax revenue, but isn’t it a bit disingenuous to give businesses (campaign contributors?) a tax break, then shift that very same tax burden onto consumers?
The Liberal government is, in effect, increasing taxes so as to “stimulate the economy” and “create new jobs.” Isn’t this exactly what genuine free market thinkers are supposed to oppose, both on principle and in practice?
That’s why the Fraser Institute’s support of the HST surprised me so much. Have they become a mere propaganda organ of the BC Liberal Party?
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