TORONTO, Ont. — OTA President David Bradley and Chairman George Ledson recently engaged Ontario’s Finance Minister Greg Sorbara in a lengthy conversation regarding the unfair sales tax treatment of Ontario based carriers compared to their U.S competitors.
The minister heard how the Ontario trucking industry must administer at least three different domestic sales tax systems for purchases of tractors, trailers, parts and maintenance and repair labour: (1) The federal GST; (2) The Ontario Multi-Jurisdiction Vehicle Tax (MJVT) for trucks that operate internationally and/or interprovincially; and, (3) The Ontario Retail Sales Tax (PST) for trucks that operate within Ontario.
OTA emphasized how the cost and administrative burden of separating the fleets, completing the forms and otherwise paying and complying with these various tax systems is wasteful and unproductive. OTA also emphasized to the minister how the MJVT will surely be an administrative burden to the Ministry of Finance once the audit process begins this month.
Bradley emphasized to the minister that no other industry in Ontario sees its business inputs taxed in such a complex and convoluted way if indeed those industry’s business inputs are taxed at all. Hard evidence of this unfair tax treatment was provided to the minister with a presentation of the findings of a tax study OTA commissioned from the Rotman School of Business.
A first of its kind regarding the tax treatment of trucking in North America, the Rotman study examined the impact of the level of business input taxation on the competitiveness of the Ontario trucking industry compared to the tax treatment of trucking business inputs in three major US trading partner states Michigan, Ohio and New York and to companies in other sectors of the Ontario economy. The study also factored in government spending in such areas as health, education and infrastructure, a long standing justification among Canadian politicians to justify higher taxes on Canadian business. Speaking from the results of the study Bradley showed Ontario’s Finance minister how Ontario based trucking firms are at a staggering 31 per cent capital tax disadvantage; 6 per cent tax disadvantage on labour and 17 per cent on product cost.
To put an end to these significant gaps in tax competitiveness Bradley called on the minister to duplicate the taxation practice of the majority of US states regarding the non-application of sales tax on trucking equipment, parts and labour. Alternatively OTA recommended that Ontario adopt a similar sales tax system as the Province of Quebec and the Atlantic provinces by harmonizing the provincial sales tax system with the Federal Goods and Services Tax (GST). While such lobby initiatives can be categorized as long-term policy objectives, OTA requested that the Minister in the short-term direct Ministry of Finance staff to work with OTA on mitigating outstanding issues with the MJVT such as lease-buyout transaction and the exit tax.
OTA staff representatives Stephen Laskowski and Doug Switzer, also in attendance, continue to work with Finance staff to address these outstanding MJVT issues.
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