With the harmonized sales tax (HST) headed for the scrap heap by March 31, 2013, B.C. business groups are lobbying for a revamped provincial sales tax (PST) to lessen the anticipated economic sting of reverting to B.C.’s old tax regime.
PST elements that are being scrutinized for possible improvements include:
•complex exemptions;
•complex paperwork;
•a costly collection system;
•the tax’s negative impact on companies considering moving to or expanding operations in B.C.; and
•how it puts manufacturing, film and other B.C. sectors at a disadvantage compared with their counterparts in Canadian jurisdictions that have the HST.
But few concrete “fixes” to the PST have thus far been proposed.
“I don’t think we have a vision specifically that could be translated into a document at this stage,” said John Winter, president and CEO of the BC Chamber of Commerce (BCCC). “What we’re really saying is that, in the absence of the benefits that were available to business through harmonization, ways must be found to create the kinds of competitive advantage or to aid the competitive advantage that HST was creating.”
Peter Leitch, co-chairman of the Smart Tax Alliance and chairman of the Motion Picture Production Industry Association of B.C., called it “early days” for discussions on improving the PST.
“It would be nice if it was closer to a value-added type tax system that the province managed itself.”
He added that some voters who opposed the HST were objecting to Ottawa managing B.C.’s taxes.
Craig Williams, vice-president of national programs for Canadian Manufacturers & Exporters, said he’s like to see the input costs from the PST reduced so that B.C. doesn’t lose its 200,000 direct manufacturing jobs to more favourable tax jurisdictions.
“We’ve got to do something or we’ll just move these high-value, mortgage-paying jobs out of the jurisdiction and we can all just be service providers and hospitality industry [employees].”
One change being proposed targets the PST collection system.
Jordan Bateman, B.C. director for the Canadian Taxpayers Federation (CFA), said the organization wants B.C. to negotiate with Ottawa to outsource PST collection to the Canada Revenue Agency.
“We’re talking about hiring 350 tax collectors [in B.C.], we’re talking about a $35 million-a-year office to run,” he said. “Even if Ottawa can do it for $25 million, we’re saving $10 million.”
Failing that, he said, the CFA wants PST paperwork streamlined so that it more closely resembles the more user-friendly GST remittance forms.
“The big thing that bothers small-business owners is having to fill out two sets of forms and two totally different sets of rules.”
Bateman said that after the tax transition, British Columbians need to tackle PST’s confusing exemptions.
“If you talk to a printing company or a design house, for example, they’ll tell you that if they provide a CD-ROM of images there’s a certain tax scheme, if they present it with printed-out proofs, there’s a different one, if they go and print the material themselves there’s another set,” he said. “These are the things that drive businesses crazy.”
Premier Christy Clark has stated that the PST will be re-instated with the exemptions that existed prior to the HST.
But opinions differ on when those reforms need to be implemented.
Leitch, for example, is advocating that reforms occur before the tax gets re-implemented. “It’s very difficult to keep adopting changes in tax policy,” he said. “I’d rather get it right than rush back and get it wrong.”
But for organizations such as the BCCC, PST reform needs to take a backseat to expediting the tax-transition timeline. During the transition, Winter said, consumers will hold off on large purchases, and that will hurt businesses such as car dealers, sellers of major appliances, travel agents and home builders.
He said reducing that transition timeline – “hopefully” to 12 months – is the BCCC’s top priority. •
