If you drive to the hospital to visit a sick friend and park in the visitors’ parking lot, you don’t have to pay the GST, thanks to a federal budget a few years ago. But if you take Uber to get to the hospital, you’re soon going to be hit with the 5 per cent tax — thanks to this week’s federal budget.

Such are the machinations of the Goods and Services Tax, which last year celebrated its 25th anniversary without a commemorative stamp or ceremony to mark the occasion — because everybody hates it.

Not everybody, actually: The idea of a broadly-based goods and services tax is still praised by economists and policy makers as less damaging to the economy than depending on personal income tax for government revenue. If you tax consumption broadly at the lowest possible rate, the theory goes, you can reap billions for health care, education and all the other things we want government to do without hurting economic growth.

If it works well, people pay a tax on everything they consume and low-income people (who spend a bigger share of what they earn on immediate consumption) get a credit to compensate. And unlike old-style sales taxes, consumption taxes hit services as well as goods — and business can get their input costs back.

But for governments, the GST remains a minefield — what a tax lawyer friend of mine calls “political kryptonite”. Looking for votes, the Harper government did irreparable damage by cutting the GST rate to 5 per cent from 7 per cent, yet the Liberals are highly reluctant to incur the wrath of the electorate by restoring the old rate — even though they could really use the money.

And politicians of all stripes can’t stop playing around with the tax — deciding which activities are virtuous enough to be exempt and which are not.

In designing the GST to begin with, the Conservative government of the day made some big decisions. They exempted major categories like residential rents, used resale housing, prescription medications, financial services and basic groceries — all politically sound calls. The grocery exemption costs Ottawa $4 billion a year and because “bad” food like soft drinks, candy and snacks are still taxed, it leads to weird anomalies. Salted nuts are taxed, unsalted ones are not. Bottled water is untaxed if it’s flat, but water with bubbles is subject to GST.

Then there’s what Finance officials used to call the “pig rule”. A single donut is taxed; act like a pig and buy six or more donuts at a time, and you’re GST free.

Uber called it a ‘tax on innovation.’ Exactly. That’s what the GST is about. That’s the GST’s point. All goods and services should be taxed, innovative or not. Uber called it a ‘tax on innovation.’ Exactly. That’s what the GST is about. That’s the GST’s. All goods and services should be taxed, innovative or not.

Once the original GST decisions were made, we might have hoped that governments would stick to their guns and stop creating exemptions — stop undermining the tax whenever they saw a political advantage. Not a chance.

When the Harperites created a GST exemption for poppies and wreaths sold by the Royal Canadian Legion, no one objected. But no one asked why commemorative ribbons and other paraphernalia sold by other charities still get taxed.

In 2015, an online campaign entitled No Tax on Tampons succeeded in convincing the Harper government to remove the GST from feminine hygiene products, including sanitary napkins, tampons and menstrual cups. The tax, it was claimed, was anti-women. (Feminine wipes are still taxed.)

So most feminine hygiene products are no longer taxed, joining adult incontinence products on the virtuous, exempt list. But baby diapers are still taxed federally, for some unfathomable reason — or they will be until a No Tax on Babies campaign manages to rustle up enough signatures to force the government to cave in again. (By the way, not taxing feminine hygiene products is forcing Ottawa to find $35 million somewhere else every year to fund its activities. And women are certainly chipping in to pay for it through other taxes.)

The most egregious case of tax-tampering has taken place in Ontario, where a desperate Liberal government has decided to rebate the 8 per cent provincial portion of the harmonized sales tax from electricity charges, though the 5 per cent federal GST remains.

It’s the ultimate robbing-Peter-to-pay-Paul measure. Premier Kathleen Wynne is ‘saving’ electricity users $1 billion, to be paid for by those same Ontario power users through higher taxes elsewhere, or through a bigger provincial deficit. And why does electricity deserve a break when natural gas and heating oil apparently don’t?

Back to the Uber tax. It’s really a small measure, which Ottawa says will raise only $4 million a year. In describing the extension of the GST to ride-sharing, the budget says the intention is “to level the playing field” and “reflect changes in the economy.”

Uber, angered by the decision, called it a “tax on innovation.” Exactly. That’s what the GST is about. That’s the GST’s point. All goods and services should be taxed, innovative or not. Using Uber’s ‘innovative’ logic, mobile phones should have been exempt for the past 20 years from the GST because they were innovative. Try to imagine where government revenues would be today if we’d only taxed land lines.

By taxing Uber, Finance Minister Bill Morneau must have known that taxi drivers would be pleased. Uber passengers will be ticked off, but not so much — and they’re certainly not organized in the same way as cabbies.

The next step in adjusting the GST to reflect “changes in the economy,” as Morneau promises to do, is clearly going to be a lot more complicated politically. Still escaping the GST are those other huge ‘innovative’ disruptors: Netflix, Spotify and other digital streaming services. Because they’re based abroad and have no physical presence in Canada, they manage to dodge the GST even though they have millions of Canadian clients.

Competitors like Bell and Rogers are livid but the Liberals are reluctant to act. In the last election campaign, Stephen Harper tweeted: “I love movies and TV shows. I’m 100 per cent against a Netflix tax. Always have been. Always will be.” The NDP and Liberals were forced to make similar pledges.

Following the election, Heritage Minister Mélanie Joly reiterated that “there will be no Netflix tax.” That sounds as if there won’t be GST on Netflix either. We’ll have to wait for the 2018 budget to know for sure.

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