Harmonizing the GST with provincial sales taxes: October 3, 1996.

• Position: Text of letters sent to Canadian Minister of Finance and to finance ministers of harmonizing and non-harmonizing provinces regarding Goods and Services Tax

On October 3, 1996, Tax Executives Institute filed a series of letters with Canadian federal and provincial tax officials concerning the harmonization of the federal Goods and Services Tax with provincial sales tax regimes. (Different letters were sent to the provinces that have chosen to harmonize their sales taxes with the GST and to those that have, to date, declined to embrace the principle of harmonization.) The letters, which are reprinted below, were prepared under the aegis of the Institute's Canadian Commodity Tax Committee, whose chair is Pierre M. Bocti of Hewlett-Packard (Canada) Ltd., and their preparation was coordinated by JA. (Drew) Glennie of Shell Canada Ltd., TEI's Vice President-Region I.

Letter to Canadian

Minister of Finance

The following letter was sent to the Honourable Paul Martin, Minister of Finance.

On behalf of Tax Executives Institute (TEI), the premier organization for corporate tax professionals in North America, I wish to congratulate you on your April 23, 1996, announcements and commend you for your leadership on many fronts.

First, TEI supports the government's decision to maintain the Goods and Services Tax (GST) in lieu of adopting an economically and administratively untested - and potentially more cumbersome - alternative form of consumption tax. Though hardly perfect, the GST serves the government's revenue requirements well without diminishing the competitiveness of Canadian exports. Hence, it promotes economic growth. Moreover, the GST will be improved by many of the technical amendments contained in the Technical Bill announced in April. Separately, TEI has submitted comments in respect of that Bill that we believe will further simplify and improve the interpretation and administration of the GST

Second, without your efforts and those of your provincial counterparts in Newfoundland and Labrador, Nova Scotia, and New Brunswick, the Memorandum of Understanding on Sales Tax Harmonization would not have come to pass. Our members know from experience the confusion and frustration engendered by, and costs associated with administering, a two-tier national sales tax system. In our view, harmonization should benefit taxpayers and government alike by substantially reducing the complexity and administrative costs associated with separate sales tax systems.

Although there are a number of technical and administrative matters that must be addressed to implement a harmonized system - indeed there are a plethora...