TEI comments on pre-budget discussions submitted to Ontario Standing Committee on Finance and Economic Affairs: February 11, 2004.

• Position: Tax Executives Institute

On February 11, 2004, TEI testified before the Ontario Standing Committee on Finance and Economic Affairs in connection with the Committee's pre-budget hearings. TEI was represented by Toronto Chapter members Vincent Alicandri of Hydro One, Inc., and Robert G. Westlake of GE Capital Canada, Inc.

Tax Executives Institute (TEI) commends the Ontario Standing Committee on Finance and Economic Affairs for holding pre-budget consultations again this year. The hearings provide an important avenue for the Committee to gather input from Ontario taxpayers and TEI is pleased to have the opportunity to participate. TEI bas several recommendations in respect of taxation measures to promote a business environment favourable to investments in Ontario thereby fostering economic growth and job creation. Our recommendations will also reduce compliance and administrative costs and spur economic efficiency and prosperity for Ontario by improving its competitiveness vis-a-vis competitors in Canadian provinces and neighbouring U.S. states.

Background

Tax Executives Institute is the preeminent association of business tax professionals. (1) TEI's 5,400 members work for 2,800 of the largest companies in Canada, the United States, and Europe. TEI's membership includes representatives from a broad cross-section of the business community, with members employed in all major industries and sectors of the economy. In that sense, TEI is unique--we do net represent a particular group or industry. These comments reflect the views of the Institute as a whole, but more particularly those of our Canadian constituency who make up approximately 10 percent of TEI's membership and belong to chapters in Toronto, Calgary, Montreal, and Vancouver. In addition, many U.S. and European members work for companies with substantial Canadian and Ontarian operations.

Summary of Recommendations

TEI urges the Standing Committee to make the following recommendations to the Ontario Government:

* Phase-out and repeal the Ontario Capital Tax (OCT).

* Announce, in the first budget message, the Government's intent to reduce the Ontario corporate income tax rate to 8 percent as budgetary constraints permit.

Ontario Capital Tax (OCT)

TEI has consistently advocated the elimination of capital taxes at the Federal and provincial levels. In November 2002, TEI testified before the House of Commons Standing Committee on Finance and urged the elimination of the Large Corporations Tax (LCT) levied under Part 1.3 of the Income Tax Act, Canada. In February 2003, the Federal government's 2003 Budget Message announced legislation to implement a phased reduction, and ultimate...