Retroactivity of proposed British Columbia revision of retail sales tax.

• Author: Riley, Phil W.

April 30, 2009

On April 30, 2009, Tax Executives Institute submitted the following comments to the Honourable Colin Hansen, Minister of Finance for the Province of British Columbia, concerning the proposed retroactive amendment of the B.C. retail sales tax in respect of certain materials mailed into the province. The comments were prepared under the aegis of TEI's Canadian Commodity Tax Committee whose chair is Phil W. Riley of Arcelor Mittal Dofasco Inc. Also contributing materially to the preparation of TEI's comments were Diana M. Spagnuolo of Imperial Oil Limited and Terri D. McPhail of TELUS Communications Inc. Mary L. Fahey, TEI's General Counsel, is the legal staff liaison to the committee.

On behalf of Tax Executives Institute (TEI or Institute), I am writing to object to the retroactive amendment set forth in Section 33 of Bill 2, Budget Measures Implementation Act, 2009. The provision imposes a tax on administrative materials mailed into the Province of British Columbia (the Province). Although the change is described as a clarification of the law, the amendment retroactively reverses a longstanding position of the Province contained in the Tax Interpretation Manual (TIM) and imposes a new tax retroactive to 2000. Accordingly, we respectfully urge that the legislation be reconsidered.

In reality, this is nothing more than the government's effort to impose a new tax on mailings into the Province to increase its tax revenues and overturn, without the benefit of any consultation, a previously stated policy upon which taxpayers relied. Even if the substance of the provisions could be justified, the retroactive enactment of the legislation violates core principles underlying BC's tax regime--fairness and predictability.

Background

TEI is the preeminent association of business tax executives. The Institute's more than 7,000 professionals manage the tax affairs of the 3,200 leading companies in Canada, the United States, Europe, and Asia and must contend daily with the planning and compliance aspects of business tax laws in Canada and other jurisdictions. TEI's first Canadian chapter was founded in Toronto more than a half century ago, and Canadians constitute 10 percent of the Institute's worldwide membership, with our Canadian members belonging to chapters in Toronto, Montreal, Calgary, and Vancouver. In addition, many of our non-Canadian members are employed by companies with substantial activities in Canada.

As a broad-based...