B.C.’s Chambers of Commerce have passed a policy calling for a dialogue toward a made-in-B.C. value-added tax (VAT), and in the shorter term, measures to mitigate the damaging effects of PST.
“Every extra day British Columbia operates under the broken and archaic PST, we do our economy, our businesses, and our residents a major disservice,” said Maureen Kirkbride, BC Chamber interim CEO. “It’s been five years since the failed HST referendum and our tax problem hasn’t gone anywhere. As British Columbians, it’s time for us to reject the PST, which is hurting our businesses and our economy, and to demand something better.”
The BC Chamber, which represents 36,000 B.C. businesses, passed a policy to tackle B.C.’s PST problem at the organization’s Annual General Meeting and Conference, held this year in Kelowna, May 29 to 31.
The policy calls for the province to launch a dialogue toward a made-in-B.C. VAT. For B.C.’s nearly 400,000 businesses, moving to VAT means:
- Having a real shot at being a world-class company, as VAT enables them to invest, tax-free, in new equipment, technology and business space;
- Shining on the world stage, as VAT removes the extra layers of tax that are currently embedded in their goods and services, stifling B.C. companies’ competitiveness in global markets; and
- Regaining precious time to strategize and work on their business – time saved from battling the cumbersome and confusing PST.
“Right now, our tax system penalizes our businesses for investing in the new technologies and equipment that position us to compete globally – and that’s concerning for our whole economy,” said Kirkbride. “We need to give our companies the opportunity to be world class – or else prepare for them to pack up shop and move elsewhere.”
Kirkbride noted that the “made-in-B.C.” part of the VAT means that British Columbians can opt to create strategic exemptions to the tax.
“We’ll have the opportunity to customize the tax to our own needs,” she said. “We can create exemptions for restaurant bills, or promote B.C. values such as green behavior or exercise. If it’s our tax, we can customize it to suit B.C., right now in 2016.”
The BC Chamber’s policy also calls for some short-term reforms to the PST to stop its two most harmful impacts on companies: penalizing investment in business equipment and technology; and wasting businesses’ time through a challenging administrative burden.
Specifically, the BC Chamber policy, Changing B.C.’s Sales Tax Model – Moving Beyond the PST, calls on the B.C. government to:
- Provide a fully refundable investment tax credit claimed on businesses’ income tax returns equal to the PST paid on acquisitions of machinery and equipment (including computers and software) but excluding buildings and structures with a capital cost allowance rate of 5 per cent or less;
- Continue to work with the BC Chamber of Commerce and others to find ways to reduce the administrative burden of the PST; and
- Commit to a dialogue with British Columbians on the development of a made-in-B.C. VAT system to enhance B.C.’s competitiveness and productivity.
Kirkbride noted that the B.C. government’s new Commission on Tax Competitiveness could be a great forum to take action on reforming the PST and finding a way forward.
“We were very pleased to see government announce the Commission to take a hard look at our tax competitiveness,” she said. “We hope to see this structure deliver substantive changes to our tax challenges.”
The BC Chamber Annual General Meeting and Conference is a unique, grassroots policy-building forum brings together approximately 200 Chamber delegates from across B.C. to vote on new business/economic policies. Policies that are adopted become part of the BC Chamber’s advocacy agenda. This year, delegates voted on 55 proposed policies. The first 29 were voted on May 30; please see news release here. The remaining 26 were voted on May 31; please see news release here. Of the proposed policies put forward this year, 49 were successful on the policy floor.
Preliminary versions of the BC Chamber’s 2016 policies, including the policy on PST reform/VAT, are available on the BC Chamber website here; please note that these may not be identical to the versions passed, due to amendments made on the policy floor.