Sales tax reform aids consumers, government and business: Report

    TORONTO, Jan. 22 /CNW/ - Supporters are rallying behind a comprehensive
report on sales tax reform in Ontario, as one of the most effective ways to
combat the economic challenges facing the province. Prepared for the Ontario
Chamber of Commerce, the report demonstrates that Ontario households,
businesses and government will all benefit from reform of Ontario's sales tax.
    "Harmonization of Ontario's sales tax with the GST will lead to a
stronger economy with higher real wages, a higher standard of living, higher
productivity, lower business costs, and increased investment. This is one of
the most important policy directions we can put in place today to position us
for a strong recovery at the end of our current economic difficulties,"
explains Len Crispino, President & CEO of the Ontario Chamber of Commerce.
"Our research has disproven all of the common objections to sales tax reform,
providing the opportunity for the province and the federal government to make
a serious commitment to enter into negotiations in order to make it happen."
    The report points out that there is currently a willingness federally to
work with provinces wishing to harmonize their sales taxes, and demonstrates
that harmonization in Ontario will give the federal government the fiscal room
to provide compensation to offset any short term loss in provincial revenues.

    Made in Ontario, The case for sales tax harmonization illustrates three
potential options for the harmonization of Ontario's sales tax with the GST:

    -   a simple harmonization which replaces the PST with an 8% tax
        harmonized with GST
    -   Made-in-Ontario alternative A which exempts the purchases of
        children's clothing, "clean" energy, labour intensive services and
        the MASH sector (Municipal, Academic, Schools, Hospitals) from the
        Ontario portion, and
    -   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.
    "Our manufacturing sector and others that rely on external markets, as
well as the domestic industries that supply them, are in need of a lower cost
of doing business so that they may be more competitive in the long term," adds
Crispino. "It's clear there's little room for tax cuts right now so other
options must be investigated. Smart tax policy just makes sense."
    The report was released in Toronto and other communities throughout the
province. It can be found at

    The Ontario Chamber of Commerce (OCC) is a federation of 160 local
chambers of commerce and boards of trade in the Province of Ontario,
representing 60,000 businesses of all sizes, in all economic sectors and from
every area of the province. In its mandate to advocate strong policies on
issues affecting its members, the OCC is currently focused on economic renewal
and business competitiveness. Its over-arching goal is to make Ontario the
most competitive jurisdiction in North America.

    Supporting Quotes:

    "Harmonizing its sales tax with the GST is one of the most important steps
Ontario could take to improve its competitiveness."

    Derek Burleton
    Associate Vice President and Director of Economic Studies
    TD Bank Financial Group

    "We are at a point where the existing ORST (Ontario Retail Sales Tax) is
so outdated and full of special exemptions that it causes an unreasonable
administrative burden to corporations to simply comply. The level of ambiguity
and inconsistency in the application of ORST also creates not only risk of
non-compliance, but also significant bias - either for or against a given
industry or producer - that it affects a corporation's ability to survive in
these challenging economic times.
    Ideally, taxes should be easy to administer, compliance should be simple,
and there should be no tax bias which affects business decisions or
competitiveness. Harmonization would bring the archaic ORST scheme light years
toward these objectives. It also goes a long way in meeting the Liberal
Government's stated goal of reducing "Red Tape" in Ontario."

    Martin Gran
    Ontario Road Builders' Association

    "The current Ontario approach taxing business inputs in the trucking
industry is out-dated and uncompetitive compared to most other Canadian
jurisdictions and the US states with whom Ontario competes. Ontario trucking
companies must administer two provincial sales tax systems - the PST and the
Multi-Jurisdictional Vehicles Tax - as well as the federal GST. The more our
members invest in new equipment and technology, the more tax they pay."

    David Bradley
    Ontario Trucking Association

    "The Certified General Accountants of Ontario supports initiatives that
help simplify our tax system. Sales tax harmonization is a major step in this
process, as it will reduce the administrative burden for businesses, large and
small, in collecting and remitting the proper amount of sales tax."

    Doug Brooks, CGA
    Chief Executive Officer
    Certified General Accountants of Ontario

    "Sales Tax harmonization is something the Federal and Ontario governments
can and must do to help businesses lower their admin costs at a time when they
need it most. It is more important now than ever before that this
harmonization take place. Neither business nor the economy can tolerate higher
costs or inefficiencies."

    Ian Howcroft
    Vice President Ontario Division
    Canadian Manufacturers & Exporters

For further information:

For further information: Amy Terrill, Ontario Chamber of Commerce, W:
(416) 482-5222, ext. 241, C: (416) 605-8205,

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