Business groups welcome suggestion for B.C. tax review

The province’s business community is getting behind a recommendation that government consider a comprehensive review of the B.C. tax system.

With many quarters saying they have been asking for such a review for years, the business community is applauding an all-party legislature committee’s recommendation that it’s time for a review of the province’s carbon tax, employer-health tax, luxury tax, speculation and vacancy tax and provincial sales tax.

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“It’s the most important recommendation for people, companies and the province that will significantly impact our quality of life, or lack thereof, for the next few years,” said Greg D’Avignon, president of the Business Council of B.C.

It’s not a sure thing the government will entertain the idea.

When asked for comment, the Finance Ministry would only say it is in the process of reviewing the report in detail and would consider all proposals during the yearly budget process.

The committee’s report — to be used to guide government preparations ahead of the budget — said the tax system needs to be modernized and should be reviewed through a lens of maintaining competitiveness, with a particular examination of cumulative impacts, as well as modernization that recognizes changing economies.

That would suit D’Avignon.

“We are effectively operating on a tax system instituted when the Queen was a princess. She’s now the longest reigning monarch in history,” he said, noting the existing tax system was built to accommodate a largely goods-producing economy and not the digital or services-based economy. “We don’t have a proper base aligned with the realities of the economy.”

The Business Council estimates the provincial taxes paid by businesses have increased by about $5 billion annually since 2013, when the short-lived harmonized sales tax was killed. It says the biggest increase was a result of the return to the PST, and a return to business paying about $3 billion annually in sales tax on a range of business inputs.

D’Avignon said a comprehensive review that will look at the PST, carbon tax, employer health tax and others is the right move.

“This is a unique and appropriate time to say: ‘what do we do to build an economic strategy that attracts and retains talent, that attracts investment, that creates higher wages and that attracts and grows the kinds of companies that can thrive in B.C. both from an environmental perspective, business perspective and globally competitive perspective,” he said.

Dan Baxter, director of policy for the B.C. Chamber of Commerce, said they would welcome some form of value-added tax to replace the PST. Baxter said all taxes are not created equal when it comes to productivity and competitiveness, and a VAT would mean the $3 billion paid on inputs would be freed up to reinvest in companies and employees.

Dan Dagg, chair of the Greater Victoria Chamber of Commerce, is on board with the review noting the chamber has been pushing for changes to the employer health tax introduced this year.

“We would like the province to raise the tax’s threshold for payrolls so it’s not hurting so many entrepreneurs. We’ve heard from employers that they’re cutting back on benefits or actively shrinking payrolls and scaling back on planned wage increases to avoid the tax hit,” he said.

The speculation tax could also be part of that review, which is something the Victoria Real Estate Board wants.

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