British Columbia provincial sales tax - improvements.

November 15, 2011

On November 15, 2011, TEI submitted the following comments to the British Columbia Ministry of Finance recommending improvements to the province's Provincial Sales Tax. The comments were prepared under the aegis of TEI's Canadian Commodity Tax Committee, whose chair is Kim N. Berjian of the ConocoPhillips Canada. Contributing substantially to the development of TEI's comments were David A. Card of Spectra Energy Corporation, Brian A. Moul of British Columbia Hydro & Power Authority, and Michael J. Willis of Lafarge Canada Inc. Daniel B. De Jong, TEI Tax Counsel, serves as legal staff liaison to the committee.

Earlier this year, residents of British Columbia approved a referendum to repeal the Harmonized Sales Tax and reinstate the Provincial Sales Tax. On August 26, 2011, the Ministry of Finance published its Action Plan to Re-implement PST. The Action Plan notes that the process of transitioning back to the PST will require much effort and a minimum of 18 months to achieve. That process will include consideration of "common sense administrative improvements to streamline the PST." To assist the Ministry in this effort, Tax Executives Institute is pleased to recommend improvements to make the PST more efficient and administrable to the benefit of both taxpayers and the province.

Tax Executives Institute (TEI) is the preeminent association of business tax executives worldwide. The Institute's 7,000 professionals manage the tax affairs of 3,000 of the leading companies in North America, Europe, and Asia. Canadians constitute 10 percent of TEI's membership, with our Canadian members belonging to chapters in Vancouver, Calgary, Montreal, and Toronto, which together make up one of our nine geographic regions, and must contend daily with the planning and compliance aspects of Canada's (and British Columbia's) business tax laws. Many of our non-Canadian members (including those in Europe and Asia) work for companies with substantial activities in British Columbia and Canada generally. The comments set forth in this letter reflect the views of the Institute as a whole, but more particularly those of our Canadian constituency.

For ease of reference, we have grouped our recommendations for simplification and improvement into five categories:

1. PST Exemptions

2. Taxing Provisions

3. Filing and Compliance

4. Audit and Appeal Procedures

5. Other Simplification Opportunities

   Given existing sensitivities to reductions in provincial revenues, we have limited our suggestions to areas where improvements can be made with little effect on overall tax revenue. Indeed, the recommended improvements will make the administration of the PST more efficient without negatively affecting the provincial budget.

   TEI is also eager to assist the province in developing transition rules to complete the move from the HST to the PST. Since significant time and effort will be necessary for businesses to restore their PST systems and re-train their staff on PST matters, uncertainty over the date the PST will be reinstated remains a major issue. We encourage the Ministry of Finance to announce the specific date the PST will be reinstated as soon as possible.

   The Institute would be pleased to meet with Ministry representatives to discuss these comments and other issues relating to the PST system.

   Appendix

   Practical Administration...