Ontario taxation changes will benefit the industry

TORONTO — The Ontario Trucking Association is applauding the province’s budget move that will harmonize the provincial sales tax (PST) with the federal goods and services tax (GST).

The harmonization has been a key recommendation of virtually every OTA pre-budget submission this decade, or at the very least, the association has requested the province to introduce a value-added form of taxation for business inputs in industries like trucking.

Finance Minister Dwight Duncan intends to move forward with the plan to harmonize the PST with the GST starting July 1, 2010.

According to OTA president David Bradley, the trucking industry has been living with “a business input tax system that is outdated, archaic, uncompetitive, administratively burdensome and discriminatory for far too long. In a low margin industry like trucking, taxes on business inputs, which a company must pay whether it is generating a profit or not, are regressive.”

“Truckers, more than many other industries in Ontario, and certainly more than our competition from other parts of Canada and from the United States, where key business inputs such as tractors, trailers, parts, etc., are either eligible for GST-type credits or are exempt from sales tax, have had to endure a situation where the more the more they invest in equipment that is more efficient, more productive, safer and more environmentally-friendly, the more tax they have had to pay,” he continued.

In addition, Bradley says the trucking industry must administer at least three different sales tax regimes – the PST on equipment used solely in Ontario, the Multi-Jurisdictional Tax (MJVT) on equipment that is used domestically and also in other provinces and states, and the GST.

Bradley says OTA “will be pressing the government for a commitment that provincial sales tax harmonization will include the MJVT, which is a special form of sales tax specifically levied on extra-provincial trucking operations, as well as the PST.”

Harmonization would also address another longstanding complaint of OTA: while the current PST is supposedly only applied to goods and not to services, for some reason maintenance and repair labour has also been subject to provincial sales tax. Under a harmonized system, truckers would receive input tax credits for this service.

The OTA also welcomed news that the province will be investing $1.7 billion in highways in fiscal year 2009-10 followed by an additional $2 billion in 2010-11.

A sum of $247 million has been allocated to the Windsor Gateway in 2009-10, plus $715 in 2010-11. As well, $648 million is being allocated to twinning sections of Highways 69, 11 and 17.

In addition, other business taxes will be cut by $4.5 billion over three years. Starting July 1, 2010 the government will: cut the general Corporate Income Tax (CIT) rate from 14 percent to 12 percent, and reduce the rate to 10 percent by 2013; cut the CIT rate for small businesses from 5.5 percent to 4.5 percent; eliminate the CIT small business deduction surtax, making Ontario the only Canadian jurisdiction that would eliminate this barrier to growing small businesses; and exempt more small and medium-sized businesses from the Corporate Minimum Tax and cut the CMT rate from 4 percent to 2.7 percent.
 

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