Posted in the Cornwall Standard Freeholder on Wednesday, December 16th, 2009.

Re: Letter on Dec 9th - “HST a real job killer”.

The letter from Brian Lynch on Dec 9th demonstrates that the NDP rhetoric and socialist ideology is so predictable, contradictory, and plainly false.

We all want jobs for Ontarians. While they want jobs, the NDP takes great liberty in slamming the employers who create the jobs – the “big bad” corporations. If anyone was concerned about the HST’s impact on job creation, it would be those same businesses, small and large, and their representative organization – the Ontario Chamber of Commerce. Businesses and the OCC have called for sales tax harmonization for years in the interest of efficiency. Small businesses have complained for years about government paperwork of all kinds. The HST eliminates the huge paper burden of the PST by combining it with the GST. Farm businesses in particular can be pleased to get rid of the bureaucracy surrounding PST exemption requirements.

It is reasonable to present an opinion. But it is poor political ethics to falsely attribute that opinion to another authority, such as Mr Lynch’s false reference to the OCC. In an open letter on Oct 21st 2009, specifically addressed to the Leader of the Ontario NDP, the OCC stated: “It has been reported in several media that our report (Made in Ontario) concluded sales tax reform will lead to the loss of some 40,000 jobs in the province. Let the record show that this narrow interpretation of the report is categorically not true.” In their report, the OCC considered the global economic situation and predicted that the rate of increase in employment over the next 25 years would slow down compared to today, irrespective of tax reform. They recommended tax reform as a stimulus for capital investment and job creation.

I will use my own case to support the OCC position. I just created a new position in my business and hired a young university graduate – the kind of highly skilled job creation that our region needs. In building the budget and weighing the risk for this new investment, I considered my annual PST savings of almost $10,000 in cash, plus the labour savings in PST reporting.

Tom Manley

Berwick Ontario

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Open Letter to Opposition Leaders and Media From the Ontario Chamber of Commerce

MARKETWIRE

Wed Oct 21 2009, 2:32pm ET
Dateline: TORONTO, ONTARIO
TORONTO, ONTARIO--(Marketwire - Oct. 21, 2009) - Ontario Chamber of Commerce

/T/

Mr. Tim Hudak, MPP
Leader of the Official Opposition
Leader of the Progressive Conservative Party of Ontario
Room 416, Main Legislative Building
Queen's Park
Toronto, Ontario
M7A 1A8

Ms. Andrea Horwarth, MP
Leader of New Democratic Party of Ontario
Room 112, Main Legislative Building
Queen's Park
Toronto, Ontario
M7A 1A5

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Dear Mr. Hudak and Ms. Horwath:

As you are well aware, the Ontario Chamber of Commerce has been a strong proponent of a harmonized sales tax - as an integral part of a larger, comprehensive tax reform strategy - for a number of years.

Since 2004, our chamber network of 160 local chambers of commerce and boards of trade, representing some 60,000 businesses of all sizes from all areas of the economy, have strongly endorsed this comprehensive tax reform.

In late 2007, the OCC commissioned an in-depth study on how a harmonized sales tax would affect governments, business and consumers. This report also analyzed three potential policy options available to government as it contemplated a move to merge the federal and provincial sales taxes.

In January 2009, the OCC released Made in Ontario, The Case for Sales Tax Harmonization. The report clearly concluded that Ontario's households, businesses and government will all experience a win-win-win from a harmonized sales tax.

Unfortunately, sales tax reform is not an easy issue to communicate or quickly understand, as its complexities lead to both subtle and nuanced changes to the economy as well as to dramatic improvements overall. As such, it is important to understand and communicate the issue of sales tax reform comprehensively, rather than examine its constituent parts individually. Indeed, the effects of a harmonized sales tax are greater than the sum of its parts.

It is likely due to the complexities of this issue that our report, Made In Ontario, The Case for Sales Tax Harmonization, has been consistently misunderstood and erroneously quoted in recent weeks. Specifically, it has been reported in several media that our report concluded sales tax reform will lead to the loss of some 40,000 jobs in the province.

Let the record show that this narrow interpretation of the report is categorically not true.

In the context of employment growth, the report examined the increase in employment over the next 25 years, relative to the status quo. The analysis clearly showed that employment will continue to grow, albeit at a slightly lower rate than the status quo, depending on which of the report's options the government adopted. In fact, the report explicitly states that the level of employment does not decline as a result of sales tax reform.

It is important to note that none of our report's scenarios were wholly adopted by the provincial government; therefore our report's analysis on employment does not fully quantify the positive effects that increased Foreign Direct Investment, combined with other personal and corporate tax reductions, will have on employment growth.

To quote our report, "Business in Ontario benefits from tax reform through a reduction in the cost of capital. This stimulates an increase in investment. The increase in capital boosts productivity and improves the competitive position of business in the province." (P. 36)

Our report also states that productivity improvements are welcome, as "in an environment of looming labour shortages the benefits of this outcome should not be discounted." (P. 34)

The above is of particular importance when one considers the demographics of Ontario's current and future labour force. It is a fact that Ontario is facing a growing skilled labour shortage as a result of an aging and retiring workforce combined with a declining birthrate. The Conference Board of Canada reports that Ontario faces a shortage of more than 360,000 skilled employees by 2025 and a shortage of more than 560,000 skilled employees by 2030. This is consistent with the OCC's own research on this subject.

Therefore, with our economy facing a shortage of over half a million skilled workers over the next generation, sales tax reform will help to address that employment gap through increased productivity.

Thank you for allowing us the opportunity to set the record straight and to provide the appropriate context for our employment projections contained in our sales tax report. As noted, sales tax reform is a complex subject, one that could easily be misinterpreted or misunderstood. If you have the occasion to quote our report in the future, then we ask that you help us to convey the accurate meaning and context of our employment figures and other data in your references.

Should you have any questions, we would be pleased to meet with you or your staff at a time of your convenience. You may direct your staff to contact Stuart Johnston, Vice President Policy and Government Relations at (416) 482-5222 ext 232, or [email protected].

Yours sincerely,

Len Crispino, President & CEO

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Cc: The Hon. Dalton McGuinty, Premier of Ontario

The Hon. John Wilkinson, Minister of Revenue

The Hon. Dwight Duncan, Minister of Finance

Mr. Norm Miller, MPP

Mr. Michael Prue, MPP

Media

Smart Taxation Alliance

OCC members

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-30-

A letter to the Ottawa Citizen.

Published Monday, March 26th, 2007

Re: Cultivating the Farm Vote; page A12, March 25th 2007

The editorial rejected the government’s intervention in the free market and predicted the creation of a farm welfare state.

That would be perfectly correct if agriculture was a free market and all players followed the rules. Unfortunately, it is far from a free market and foreign players dictate the rules of the market. The editorial confused the issue. Subsidies to farmers are not about the cost of production, but rather about the failure of market prices.

A free market balances supply and demand, where inefficient or excessive supply exits the market, as the editorial explained. Contemporary international agriculture has little to do with supply and demand, as demonstrated by our historically low reserves of food in the world today.

Contemporary agriculture is all about the power of suppliers versus the power of demanders. On one side, we have millions of independent farmers worldwide buying supplies from and selling commodities into the market with little or no individual negotiating power. On the other hand, large trans-national corporations have consolidated market power. They control seed, machinery, fertilizers, and commodity markets. Therefore, farmers are price takers for both farm inputs and farm produce.

The second failure of the market comes from extensive and long term production and export subsidies in the US and the EU. When the world’s major food exporters and consumers have decided to interfere with commodity prices, then Canada can little to correct it. We cannot simply close the border as we are also a food exporter. We cannot impose import duties as our other food exports are connected to imports. We must therefore match foreign subsidies with appropriate income supports for our farmers as well.


By Tom Manley

A letter to the editor as published in the Cornwall Standard Freeholder, sometime in 2004, by Tom Manley

Recent events reported in local media highlight the unsustainability behind the current notion of free trade. The threatened closure of Consoltex in Alexandria and the announced consolidation of Royal Windows in Cornwall are both being blamed on cheap imports and global competition. More importantly, an article published in September reported StatsCan figures suggesting that Free Trade has not made Canadian industry more competitive; instead, it forced the closure of small plants and gave the illusion of efficiencies through economies of scale among the remaining large plants.

Let us first understand the notion of trade. It essentially means that my product must be cheap enough to absorb the costs of transportation, brokerage, and distribution to be extremely competitive in a distant market. I say extremely competitive because the selling price must be low enough to overcome the natural preference for domestic products in that distant market. Therefore, Free Trade is essentially the movement of relatively free products from a low price market into a distant high price market.

Two things make exports cheap enough for distant markets: low overhead costs and a undervalued currency.

Canadian manufacturers and farmers must compete with developing countries that have relatively poor social services, education, health and infrastructure. Therefore, the only way to compete with a barefoot peasant is to become one. I dare say that we are doing exactly that. The team supporting the Consoltex plant are so happy to be able to save the jobs by negotiating a wage decrease! The recent trend in provincial and federal governments has been to reduce public services and taxes in order to make Canada more competitive. Competitive with who, I ask? What happened to the benefits of the organized labour movement of the 20th century? And this has only started! Just look at how Chinese and India industries are gearing up to export to the world.

Secondly, exports become relatively cheap when we devalue our currency. The World Bank devalued many currencies in debt loaded countries in the 80's and 90'. Canada did it voluntarily and progressively so we did not feel the upheaval felt in those countries. Canada has enjoyed the last decade of prosperity largely thanks to our low Canadian dollar. Now this is changing and we can only expect a sharp decline in exports. The USA has also understood that they cannot compete in a world market with a strong currency.

Competitiveness is not sustainable if it relies on a devalued currency and poor social services. On the contrary, a healthy competitiveness can rely only on the human values of innovation, productivity, creativity, hard work, excellent customer service, and good product quality.

We do not need Free Trade. We need Fair Trade. Fair Trade occurs on a level playing field where populations enjoy similar social services and infrastructures, and receive a decent wage. A level playing field requires a stable or fixed exchange rate between currencies. All this was the whole point of the European Union and the Euro, to create a level playing field for the fair movement of goods, services, and people.

Tom Manley