TORONTO — One of the big political buzzwords of the day is change, and the Ontario Trucking Association wants to see some of it in the province’s tax system.
The OTA is one of nine supporting organizations listed in an Ontario Chamber of Commerce (OCC) report, which makes the case for sales tax harmonization between the Provincial Sales Tax (and by extension the Multi-Jurisdictional Vehicle Tax) with the federal Goods and Services Tax (GST).
The OCC report — entitled, “Made in Ontario: The Case for Sales Tax Harmonization” — illustrates three potential options for the harmonization of Ontario’s sales tax with the GST.
The first is a simple harmonization which replaces the PST with an 8 percent tax harmonized with GST; the second is made-in-Ontario alternative A, which exempts the purchases of children’s clothing, “clean” energy, labor intensive services and the MASH sector (Municipal, Academic, Schools, Hospitals) from the Ontario portion; and the third is made-in-Ontario alternative B, which zero-rates financial services from the Ontario portion.
All three options build in an Ontario sales tax credit for low income Ontarians. In addition, the alternative models provide opportunities for government to advance such things as a poverty agenda, incentives for green technology, and support for municipalities in terms of their burgeoning infrastructure deficit, notes the OTA.
"The current Ontario approach taxing business inputs in the trucking industry is out-dated and uncompetitive compared to most other Canadian jurisdictions and the U.S. states with whom Ontario competes,” states David Bradley, OTA president. “Ontario trucking companies must administer two provincial sales tax systems — the PST and the Multi-Jurisdictional Vehicles Tax — as well as the federal GST."
In recent years, during presentations and consultations as part of the Government of Ontario’s pre-budget preparations, OTA has called for sales tax reform on business inputs. OTA has argued that the trucking industry is discriminated against in terms of taxation of its business inputs (tractors, trailers, parts, maintenance and repair labor) compared to many other industries in Ontario and carries a higher tax burden than competitors from other parts of Canada, including Quebec and the Atlantic Provinces which have already harmonized their tax systems with the GST.
According to Bradley, “the more a trucking company invests in equipment in Ontario, the more tax it pays. That doesn’t make sense in this day and age, or from a safety, environmental or economic point of view.”
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