B.C. commission calls for tax reforms, exemptions worth $1.1B to spur investment

Nov 23, 2016 | 10:51 AM

VICTORIA — A panel of experts is recommending the British Columbia government chop taxes to provincial businesses by about $1.1 billion a year in an effort to spur lagging investment.

The Improving B.C.’s Tax Competitiveness report makes four recommendations including exempting businesses from the seven-per-cent provincial sales tax on capital expenses for items like machinery and equipment.

The report also recommends exempting the PST on electricity costs and other energy, and suggests the province implement a made-in-B.C., value-added tax.

It says the value-added tax would address problems with the PST, including investment disincentives and an increase in business costs.

Commission spokesman Bev Dahlby says the reforms are required to improve business investment in B.C., which is currently behind most other provinces.

Removing the provincial tax on capital investments for machinery and equipment would cost the province $640 million annually, while taking the PST off electricity and other energy costs amounts to $520 million a year.

But the report says those measures would be offset by increased investments by businesses and likely higher wages for workers, which increases income revenues for the province.

“The PST is a very complex tax that places a significant amount of burden on businesses, especially small businesses,” Dahlby says in the report.

He says during public meetings, many businesses said they would rather the province tackle PST reforms than reduce corporate taxes.

“One small business said the complexity of the PST means it acts like a tax on entrepreneurship.”

The report says the complexity of the PST creates a major burden on businesses, diverting effort from more productive and potentially growth-creating activities.

The report did not examine B.C.’s carbon tax or a return to the harmonized sales tax, which British Columbians turned down in a referendum more than five years ago.