The Fraser Institute: With Pending Return of the PST, BC Needs Tax Reform to Attract Investment, Create Jobs, and Make Province a Better Place to Work
(firmenpresse) - VANCOUVER, BRITISH COLUMBIA -- (Marketwire) -- 07/05/12 -- If BC wants to reduce the negative effects that reintroducing the Provincial Sales Tax will have on the province's investment climate, it should consider exempting all business inputs from the PST, among other reforms, says Charles Lammam, Fraser Institute associate director of tax and budget policy research.
The recommendations are contained in a Lammam and two co-authors submitted to the British Columbia Expert Panel on Business Taxation. Made up of a cross-section of BC tax and finance experts, the Expert Panel was appointed in January by Finance Minister Kevin Falcon to provide analysis and recommendations to the province on business tax competitiveness and administrative improvements to streamline the Provincial Sales Tax.
"Different taxes impose different costs on the economic well-being of BC families. The PST is one of the most detrimental forms of taxation because it taxes production and drives up the cost of investing in BC," Lammam said.
"If the government wants to provide more opportunities for families to prosper, it should consider tax reforms that will reduce the PST's negative impact, make BC a better place for investors to set up operations or expand, and enable the province to better attract and retain highly-skilled workers."
With the return of the PST, Lammam notes that BC will have one of the highest overall tax rates on investment, putting it at a distinct disadvantage compared to key provincial competitors like Alberta, Saskatchewan, and even Ontario.
"BC is competing with these provinces and other jurisdictions for investment dollars and skilled workers. With the introduction of the HST, BC improved its tax policy competitiveness. By returning to the PST, we're taking a step backwards and making ourselves less competitive."
The submission to the Expert Panel recommends:
Lammam pointed out the recommended tax changes could be implemented within the provincial government's balanced budget framework so they do not increase government debt. This could be accomplished by broadening the consumption tax base of the PST and eliminating many of the special exemptions. The provincial government could also eliminate or scale back many of the corporate and personal income tax credits currently offered.
"While expanding the list of goods and services subject to the PST may not be politically feasible, the government currently provides numerous tax credits with questionable economic value to certain businesses and individuals that come at the expense of others. Eliminating these credits would broaden the tax base while simplifying the tax code," Lammam said.
"Most importantly, the government should refrain from increasing taxes that are highly economically damaging, such as personal and capital-based taxes, as it seeks to garner revenue for other tax reductions. Alternatively, it could wait to enact the proposed tax reforms until after the budget is balanced and revenues become available."
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The Fraser Institute is an independent Canadian public policy research and educational organization with offices in Vancouver, Calgary, Toronto, and Montreal and ties to a global network of 80 think-tanks. Its mission is to measure, study, and communicate the impact of competitive markets and government intervention on the welfare of individuals. To protect the Institute's independence, it does not accept grants from governments or contracts for research. Visit .
Contacts:
The Fraser Institute
Charles Lammam
Associate Director
Fraser Institute Centre for Tax and Budget Policy
(604) 714-4544
; Twitter: (at)CharlesLammam
The Fraser Institute
Dean Pelkey
Director of Communications
(604) 714-4582
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Datum: 05.07.2012 - 07:32 Uhr
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