Harmonized sales tax in Prince Edward Island.

June 27, 2012

On June 27, 2012, TEI submitted the following comments to the government of Prince Edward Island and the Canadian Department of Finance in support of the announcement that the province had entered into formal negotiations with the Canadian government to replace its provincial sales tax with a harmonized 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 was Robert J. Smith of McKesson Canada. Daniel B. De Jong, TEI Tax Counsel and liaison to the Canadian Commodity Tax Committee, coordinated the development of the Institute's comments.

On April 18, 2012, the government of Prince Edward Island announced it had entered into formal negotiations with the federal government to replace the provincial sales tax (PST) with a harmonized sales tax (HST), effective April 1, 2013. On behalf of Tax Executives Institute (TEI), I am writing to express our support for this initiative, and to offer our assistance with transitional and other issues that may arise as PEI implements the new taxing regime. As an organization dedicated to making tax systems more efficient, TEI has long supported harmonization efforts that eliminate the cascading effect of sales tax on business inputs and promote a more neutral and competitive business environment.

Background

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

Implementation

The HST was first adopted by the other Atlantic Provinces in 1997 and eventually by British Columbia (1) and Ontario in 2010. TEI members and their employers invested considerable time implementing these provisions...