A panel looking at how the province measures up when it comes to tax competitiveness says there are some solutions to where we are falling behind.
Commission Chair Bev Dahlby says the panel found B.C. is not keeping pace in capital investment.
He says this comes from an under-investment over time and, also, our taxes.
“The effects of the tax system and in particular the PST on machinery and equipment is one of the factors that has resulted in this lagging investment in British Columbia.”
Dahlby says the panel recommends a short-term PST exemption on machinery and equipment.
“Our estimate is that PST represents 60 per cent of the total tax wedge and if it was eliminated British Columbia’s tax wedge would be one of the lowest in the country.”
Looking forward the panel suggested looking at a B.C. value-added tax and a way for investors to work out long-term property tax agreements to increase certainty.
Finance Minister weighs in
BC’s Finance Minister says the government will look at all recommendations made by the tax competition panel but some changes are more likely than others.
Mike De Jong says don’t hold your breath on the government moving on the suggestion of implementing a value-added tax any time soon.
“It would be a very significant shift and as the Commissioners themselves point out it would require an extensive period of consultation and discussion.”
De Jong says the government will look at a short-term PST exemption on capital purchases like machinery to improve competition.
But, he says, the cost of that to the provincial bottom line would be hundreds of millions of dollars.
The panel was independent but following a government mandate.