HST and Harper's billion dollar Bay Street subsidy

This is a follow-up to my earlier posting entitled Why are underwriting fees exempt from GST, hence HST?

Not taxing the service known as underwriting fees is costing both levels of government approximately $308 million a year, or billions over the course of a given budget cycle.

Below are the facts that support that claim.

Why does this inequity exist and how can it be justified in policy terms?

As a former Investment Banker myself, I have always maintained that Investment Bankers are merely glorified real estate agents. Why are real estate agents’ fees paid by home vendors subject to GST and now HST, while investment banking fees paid by stock issuers are not?

What is the logic? Where is the fairness? Why are mutual fund fees paid by investors subject to GST and now HST and yet investment banking fees get off scott- free?



For the year ended October 31, 2009, Canadian Bank owned dealers ( including RBC Capital and TD Bank) underwrote US$47.3-billion in new equity issues. At an average underwriting commission of 4.5%, this translates into CDN$ 2.4 billion in underwriting fees on which ZERO GST was collected. Why is this highly lucrative “service” going untaxed? Why is the government foregoing $118 million in GST taxes?

Is it because the Harper and McGuinty governments think that every investment banker should have a Porsche in his or her garage?

Why is this highly lucrative and remunerative “service” not going to be subject to HST? Why is the government foregoing $308 million in HST taxes? Why is that? Meanwhile investors are being taxed 13% GST on their mutual fund fees.

Why are the corporations as USERS of capital along with their middle-men, the investment bankers, not being taxed, whereas the investors as the PROVIDERS of capital ARE being taxed?