TORONTO, Ont. — Ontario premier Dalton McGuinty is encouraging Michigan Governor Jennifer Granholm to amend the Michigan Business Tax Act (MBT) and restore tax reciprocity between the two jurisdictions or risk impeding trade and worsening current economic difficulties.
In a letter to the Governor, McGuinty calls the new MBT, “a tax barrier to cross-border trade that affects at least two of Ontario’s key industrial sectors: automotive parts and trucking, both of which are major suppliers to Michigan’s industry.”
According to McGuinty, “Cross-border trade between Ontario and Michigan has flourished, in part, because of the elimination of taxes on foreign companies that do not have a permanent establishment in our respective jurisdictions. It is a long established practice in Ontario not to tax Michigan-based companies that do not have a permanent establishment in our province.” And, he added, “nor does Ontario have a gross receipts tax,” which is a key component of the MBT.
David Bradley, president of the Ontario Trucking Association (OTA), whose association, along with the Automotive Parts Manufacturers Association, has been leading the charge to get the MBT changed, welcomed the Premier’s intervention. “This is precisely the kind of message that needs to be conveyed to the Michigan government; that the Ontario government is watching the situation closely and is very interested in an outcome that treats Ontario companies the same way Michigan companies are treated here.”
OTA and the APMA have been working closely with the Canadian Consulate General in Detroit. Last month, a bill was passed in the Republican controlled state senate to restore tax reciprocity, and the associations are hopeful that an identical bill will soon be introduced in the House of Representatives.
OTA estimates that if imposed on Canadian trucking companies, the MBT could amount to an additional tax of $1,000 per truck per year. “When the industrial heartland of North America is already reeling from slower economic growth, off-shore competition and a thickening of the Canada-US border, this tax is not only unfair and inconsistent with international tax norms, it only serves to worsen an already dim economic situation for the region,” says Bradley.
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