Burnaby Board of Trade: “It’s time to fix the PST”
On the 2-year anniversary of the return of the provincial sales tax (PST), the Burnaby Board of Trade (BBOT) is calling on the provincial government to fix the tax by beginning to remove the tax burden on business investments in new equipment, machinery and software with the creation of a refundable input tax credit.
According to a policy bulletin released by the BBOT on Wednesday, businesses in BC used to be able to claim a credit for the taxes paid on equipment and software investments under the HST, but the switch back to the PST eliminated those credits, effectively amounting to a 7% tax increase on key investments. This has led to BC having one of the worst Marginal Effective Tax Rates for businesses in the country, second only to Manitoba.
The bulletin suggests that government, by implementing an input tax credit for new equipment, machinery and software in particular, could help invigorate business investment in the province and help boost the competitiveness of our local firms.
“The taxes paid on business investments – such as new equipment, machinery, and software – forces BC companies to pay more than almost every other province in Canada,” said BBOT President & CEO Paul Holden. “This is the two year anniversary of the return of the PST, and so we thought it was appropriate to take the opportunity to call for a credit for business inputs that could help reinvigorate business investment, boost our competitiveness, and drive economic output.”
In the policy bulletin, the BBOT suggests that increased tax paid by businesses due to the re-implementation of the PST, the 1% increase in the corporate tax rate announced in 2013, as well as the $1.06 billion in projected surpluses over the next three fiscal years, means that there is now sufficient fiscal room to address the issue.
“We recognize and support the government’s need to be fiscally prudent and we’ve applauded the return to a balanced budget in recent years. However, with a provincial surplus of $879 million announced for this year, and projected surpluses of over 1 billion for the next three years, we believe now is the time to commit to fixing the PST,” said Holden.
The bulletin also notes that while the immediate goal is to have some level of refundable input tax credit for equipment, machinery and software implemented, the BBOT would ultimately like to see a full 7% PST tax credit for those investments phased in, and is recommending government begin consultations with it and the business community to address the issue.