Pending Canadian excise tax issues.

• Position: Tax Executives Institute's Canadian Commodity Tax Committee

On December 14, 1994, Tax Executives Institute held its annual liaison meeting on pending excise tax issues with officials of the Canadian Department of the Finance. (A separate liaison meeting was held on pending income tax issues.) In connection with the income tax meeting, the Institute submitted the following comments, which were prepared under the aegis of TEI's Canadian Commodity Tax Committee, whose chair is Pierre M. Bocti of Hewlett-Packard (Canada) Ltd. Also participating in the liaison meeting were C. Graham Kennedy of MacMillan Bloedel Limited, the Institute's Vice President-Region I, and other members of the Canadian Income Tax Committee, as well as TEI President Linda B. Burke.

Tax Executives Institute welcomes the opportunity to present the following comments and questions on several pending commodity and excise tax issues, which will be discussed with representatives of the Department of Finance during TEI's December 14, 1994, liaison meeting. If you have any questions about these comments, please do not hesitate to call either C. Graham Kennedy, TEI's Vice President for Canadian Affairs, at (604) 661-8549 or Pierre M. Bocti, chair of the Institute's Canadian Commodity Tax Committee, at (905) 206-3399.

1. Background

   Tax Executives Institute is an international organization of approximately 5,000 professionals who are responsible - in an executive, administrative, or managerial capacity - for the tax affairs of the corporations and other businesses by which they are employed. TEI's members represent more than 2,800 of the leading corporations in Canada and the United States.

   Canadians make up approximately 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. In addition, a substantial number of our U.S. members work for companies with significant Canadian operations. In sum, TEI's membership includes representatives from most major industries, including manufacturing, distributing, wholesaling, and retailing; real estate; transportation; financial services; telecommunications; and natural resources (including timber and integrated oil companies). The comments set forth in this submission reflect the views of the Institute as a whole, but more particularly those of our Canadian constituency.

2. Replacement of GST

   Since before the elections in October 1993, the tax issue singularly consuming taxpayers, the media, and tax policymakers in every branch of government is the examination and debate over reform of, or replacements for, the GST. TEI is vitally interested in contributing to that debate, having submitted specific comments on the GST to the Standing Committee on Finance of the House of Commons and providing copies of TEI's comparative study of value-added tax systems around the world to interested government officials, tax practitioners, and taxpayers with an interest in tax policy and administration. In addition, we have written letters to all of the provincial ministers of revenue urging them to consider implementing retail sales tax systems that "piggyback" off of, and are fully harmonized with, the GST (or its replacement). [Editor's Note: TEI's comments to the Standing Committee on Finance were reprinted in the May-June 1994 issue of The Tax Executive and a sample of the letters it submitted to the provincial finance ministers was reprinted in the November-December 1994 issue.)

   Recently, the process for debating of alternatives to the GST - a process that began with considerable deliberation and constructive dialogue - has acquired a "flavour of the month" quality, as the search for an administrable replacement tax has degenerated into a search for a palliative. Thus, the "10-percent solution" became the "11-percent solution" (which may soon be the "12-percent solution"). Another "solution" being bandied about involves abolishing both the GST and provincial...