BC Government Appoints Tax Panel

by Mike Godfrey, Tax-News.com, Washington

17 January 2012

The British Columbian government has appointed an Expert Panel on Tax to provide recommendations on business tax competitiveness and improvements to sales tax administration.

The appointment was unveiled by provincial Finance Minister Kevin Falcon in a recent speech to the Vancouver Board of Trade. He said that the panel forms part of the government's "Canada Starts Here: the B.C. Jobs Plan", and added that while challenging global economic conditions prevail, fiscal prudence and a focus on a competitive economy that creates jobs and attracts international investment will help the province manage these risks.

The panel is charged with providing analysis and recommendations on business tax competitiveness and administrative improvements to streamline the Provincial Sales Tax (PST). The province is in the process of transitioning back to a PST-based sales tax regime, after a failed experiment with a harmonized sales tax (HST) system.

The panel will consider the competitiveness of British Columbia’s tax environment for business and make suggestions about which taxes most influence competitiveness and economic growth. It will identify and develop recommendations for ways in which the provincial government could address tax avoidance within the business or personal taxation systems. In addition, a component of the review will look at municipal property taxation of business.

Among the guidelines set out for the panel are the following:

• Acknowledging that the HST was intended to improve the competitiveness of the provincial economy, the review is intended to identify other ways to maintain and improve British Columbia’s economic competitiveness, while respecting the results of last August's referendum to return to the PST;
• The review will be restricted to provincial business taxes of general application, including tax expenditures and property taxation but excluding resource royalties and non-tax issues;
• The review will include an examination of municipal property taxation of business and its impact on business competitiveness and investment. Recommendations must address issues of affordability and sustainability for local governments within the framework of the Community Charter;
• Tax reforms or other recommendations must be fiscally neutral and sustainable for the Province within the Province’s balanced budget framework; and
• The Panel may commission independent research as necessary to conduct its review.

The panel will be chaired by Sarah Morgan-Silvester, Chancellor of the University of British Columbia. Its five other members are: Lindsay Hall – chief financial officer, Goldcorp; Laura Jones – senior vice-president research, Economics & Western Canada, Canadian Federation of Independent Business; Elio Luongo – Canadian managing partner, KPMG and vice-president of the Vancouver Board of Trade; Fiona Macfarlane – managing partner, Western Canada and chief inclusiveness officer, Ernst & Young LLP; Grace Wong – senior advisor international, office of the provost and vice-president academic, University of British Columbia; and the panel includes an adjunct member, Dale Wall – former deputy minister, Ministry of Community and Rural Development, Province of British Columbia.

Falcon said: “We need to support a globally competitive, diverse economy that supports jobs and innovation within the Province’s balanced budget framework. The expert panel is intended to identify other ways to maintain and improve B.C.’s economic competitiveness, while respecting the referendum result to return to the Provincial Sales Tax. We will carefully consider all recommendations of the tax panel, while delivering prudent fiscal management for British Columbia.”

Panel chair Morgan-Silvester added: “The panel offers a broad range of experience in business and finance, and I look forward to working with them on this review. We are focused on helping British Columbia find ways to attract new investment, create jobs and grow our economy within a balanced budget.”

The report will be submitted by August 31, 2012.

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