BC – The province’s CPAs are increasingly finding the current provincial sales tax (PST) regime to be a roadblock to business success in BC Nearly 60 per cent of CPAs find the return to the PST system has posed a “major” or moderate” challenge to business success, an increase of 6 per cent from 2015, in the latest Business Outlook Survey administered by the Chartered Professional Accountants of British Columbia (CPABC).
Over a quarter of those who ranked the return to the PST system as a major challenge to business success cited “higher taxes or costs for business” as the main impact of the PST. At 27.5 per cent, BC also has the second highest Marginal Effective Tax Rate (METR) in Canada. The biggest impact of the METR when comparing across provinces is the application of a retail sales tax on all business inputs. In fact, by reinstating the PST, an additional 10 per cent cost is applied on business inputs compared to when the Harmonized Sales Tax was in place.
The current tax regime is a hindrance on investment and productivity, negatively impacting job creation and economic growth. The decline in the value of the Canadian dollar further reduces business spending power, as most new equipment and technology is purchased in the United States. This has the potential to be a significant longer term problem for BC’s economy.
Quick Facts:
- When comparing BC to the rest of Canada, 36 per cent of respondents predict BC’s economy to grow faster than the Canadian average in the next two years. This percentage is up from 2015 (30 per cent) and 2014 (29 per cent) indicating an increasingly positive outlook for the province’s economy.
- Consistent with results from the past two years, survey respondents continue to be optimistic about BC’s economy with 62 per cent rating it as “good” or “excellent.” This positive outlook continues with one-quarter of respondents expecting BC’s economic performance to improve over the next two years.
