OTTAWA — The federal government and the opposition parties have finally agreed on something, allowing Ontario and B.C. to harmonize their sales taxes with the GST.
Members of Parliament supported a change to the Excise Tax Act by a vote of 192 to 32. The vote paves the way for the federal government to introduce legislation as early as Friday, which is strongly supported by the Ontario Trucking Association.
Appearing before the Ontario Legislature’s Standing Committee on Finance at Queen’s Park yesterday, OTA president, David Bradley, came out strongly in support of the provincial government’s proposed legislation.
“Moving to harmonize the provincial sales tax (PST) and the Multi-Jurisdictional Tax (MJVT) with the GST has been a key recommendation of virtually every OTA pre-budget submission since the early 1990’s,” said Bradley.
Bradley told the committee that, “The current Ontario sales tax system for business inputs is out-dated, inefficient, stymies investment in safety and the environment and is ultimately uncompetitive. Ontario-based trucking companies pay provincial sales tax on virtually all business inputs, whether in the form of the 8% PST or the complicated MJVT.
“These taxes are applied not only to the purchases of equipment and parts, but also on maintenance and repair labour service. The fact is that the more Ontario carriers invest in safety, in reducing their environmental footprint and in productivity, the more tax they pay.”
He went to tell the MPPs that, “Most U.S. states exempt trucking equipment and service from state sales taxes. Further, a more recent analysis conducted by Deloitte & Touche compared an Ontario and Michigan trucking company both generating $10 million in annual sales, with taxable capital of $20 million, both splitting their miles 50-50 between Ontario and Michigan and found that the Ontario carrier can pay at least twice the amount of total tax as the Michigan carrier.”
“In addition to this heavy tax burden which makes Ontario truckers less competitive with carriers from other jurisdictions, our members also have to carry a bigger administrative burden than their competitors because they must administer three separate sales tax systems – the PST, the MJVT and the GST,” he continued.
“This is unnecessarily costly, and unproductive. 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.”
He concluded by saying that, “The HST will give us a simpler, fairer, harmonized system that applies sales tax in a more appropriate manner that minimizes inequities and opens the way for economic growth.”
OTA is also supporting the HST legislation as part of the Smart Taxation Alliance, a non-partisan coalition of business groups.
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