TORONTO – A powerful business lobby added its voice Monday to those calling on Ontario’s Liberal government to merge the province’s eight per cent sales tax with the five per cent goods and services tax.
The Canadian Council of Chief Executives says combining the sales taxes “would be the single most powerful measure” the province could take to encourage business investment and growth.
The council has written Premier Dalton McGuinty asking to have a clear commitment in the March 26 budget on tax harmonization, calling it the right move at the right time.
McGuinty admits the business community seems unanimous in wanting him to merge the sales taxes, and has said it’s an option he’s looking at.
However, harmonization would impose Ontario’s eight per cent sales tax on items that are currently exempt, including new homes, books, heating fuel, children’s clothing and diapers.
Businesses pay both taxes on equipment and machinery, as well as on daily operating costs such as electricity, but they can only claim a tax credit for the GST.
The Ontario Chamber of Commerce has also been pushing the province to harmonize the two sales taxes to help lower costs and cut paperwork.
Quebec, New Brunswick, Nova Scotia and Newfoundland and Labrador have already harmonized their provincial sales taxes with the GST – with financial help from Ottawa.
In the case of the Atlantic provinces, the change more than doubled tax on gasoline, heating oil, privately sold used cars and other items in 1997.
A study in Nova Scotia estimated consumers paid an extra $84 million in the first year of harmonization.
