Ontario Chamber of Commerce 180 Dundas Street W., Suite 505 Toronto, ON M5G 1Z8 T: 416-482-5222...
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Transcript of Ontario Chamber of Commerce 180 Dundas Street W., Suite 505 Toronto, ON M5G 1Z8 T: 416-482-5222...
Ontario Chamber of Commerce180 Dundas Street W., Suite 505 Toronto, ON M5G 1Z8 T: 416-482-5222
occ.on.cataxharmonization.ca
Stuart JohnstonVice President Policy & Government RelationsT: 416-482-5222, ext 232E: [email protected]
Sales Tax HarmonizationOCC Comprehensive Tax Reform Package
Greater Kingston Chamber of CommerceNovember 25, 2009
OCC Comprehensive Tax Reform Package
Sales Tax Harmonization
• OCC Tax Reform Package• What is a Single Sales Tax?• Key Points• Sales Tax Details• Other Tax Reforms• Case Studies
180 Dundas Street W., Suite 505 Toronto, ON M5G 1Z8 T: 416-482-5222 www.occ.on.ca
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The status quo is not good enough.
180 Dundas Street W., Suite 505 Toronto, ON M5G 1Z8 T: 416-482-5222 www.occ.on.ca
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OCC Comprehensive Tax Reform Package• 2004 & 2007 – network approval
2006 – tax consolidationBy 2010 – capital tax elimination
• 2007-2009 detailed 3rd party report on single sales tax2009 budget – sales tax harmonization
• RESULT? Businesses will be paying less tax in the years to come
• A more competitive Ontario
180 Dundas Street W., Suite 505 Toronto, ON M5G 1Z8 T: 416-482-5222 www.occ.on.ca
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Elimination of Capital TaxesElimination of Capital Taxes
Corporate Income Tax
Consolidation
Corporate Income Tax
Consolidation
Sales Tax Harmonization
Sales Tax Harmonization
Income Tax ReductionsIncome Tax Reductions
Lower, Business
Education Tax Rate
Lower, Business
Education Tax Rate
Sales Tax Harmonization
What is a Single Sales Tax?
• July 1, 2010 – Retail Sales Tax eliminated
• Federal Government sole collector of single sales tax
• New tax will mirror the GST in virtually every aspect at new rate of 13%
• Provincial Government is getting ‘out of the sales tax business’
180 Dundas Street W., Suite 505 Toronto, ON M5G 1Z8 T: 416-482-5222 www.occ.on.ca
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Sales Tax Harmonization
Impacts on Business• Administration Costs
$500 million1 tax, not 2
• Operating Costs
$5 billion PSTHidden in
supplychain
Businesses will be ‘sales tax free’
180 Dundas Street W., Suite 505 Toronto, ON M5G 1Z8 T: 416-482-5222 www.occ.on.ca
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Sales Tax Harmonization
Impact on Business... cont’d
180 Dundas Street W., Suite 505 Toronto, ON M5G 1Z8 T: 416-482-5222 www.occ.on.ca
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• Business Investment
New equipment & machineryMore staffLower prices for consumers
Atlantic Provinces – consumer price index lower
Sales Tax Harmonization
Impact on Consumers
180 Dundas Street W., Suite 505 Toronto, ON M5G 1Z8 T: 416-482-5222 www.occ.on.ca
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Change in Taxable Status for Consumers
17%
No Change in Taxable / Exempt
Status for Consumers
83%
Note: * Proportion of consumer spending. Tax status is based upon whether the good or service is currently taxed to the consumer. Diagram is for illustrative purposes. Based on 2005 provincial Input-Output tables. Detailed tax treatment is set out in the 2009 Budget, this paper and Single Sales Tax Information Notice 2 — June 18, 2009.Source: Ontario Ministry of Finance.
Sales Tax Harmonization
Business Tax Reductions
Corporate Income Tax Rate ReductionsRates (Per Cent)
Date General M&P Small Business
Small Business Deduction Surtax
Current 14 12 5.5 4.25July 1, 2010 12 10 4.5 0July 1, 2011 11.5 10 4.5 0July 1, 2012 11 10 4.5 0July 1, 2013 10 10 4.5 0
180 Dundas Street W., Suite 505 Toronto, ON M5G 1Z8 T: 416-482-5222 www.occ.on.ca
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•Business Education Tax Rate: 1.52% by 2014•Personal Income Tax Reductions: to 5.05% from 6.05%
Sales Tax Harmonization
Impact on Business... cont’d
Cutting Ontario's Marginal Effective Tax Rate on New Investment in Half*
32.8
18.6 17.3 16.2
0
5
10
15
20
25
30
35
2009 2010 2013 2018
Per Cent
* Includes the Ontario CIT rate cuts and single sales tax proposed in the 2009 Budget, the phase-out of Ontario’s capital tax by July 1, 2010, and the reduction in the general federal CIT rate to 15 per cent by 2012.Sources: Ontario Ministry of Finance and Finance Canada.
180 Dundas Street W., Suite 505 Toronto, ON M5G 1Z8 T: 416-482-5222 www.occ.on.ca
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Sales Tax Harmonization
Impact on Business... cont’d
180 Dundas Street W., Suite 505 Toronto, ON M5G 1Z8 T: 416-482-5222 www.occ.on.ca
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11.6 10.8 9.7 9.7
8.26.8 6.5 6.5
10.4
1.11.0
0
5
10
15
20
25
30
35
2009 2010 2013 2018
Ontario Sales TaxOntario Capital Tax
Ontario CITFederal CIT
(Per Cent)
* Includes the Ontario Corporate Income Tax (CIT) rate cuts and harmonized sales tax proposed in the 2009 Budget, the phase-out of Ontario’s capital tax by July 1, 2010, and the reduction in the general federal CIT rate to 15 per cent by 2012.Sources: Ontario Ministry of Finance and Finance Canada.
Cutting Ontario’s METR on New Business Investment in Half*
U.S. average (2012)
OECD average (2012)
17.3 16.2
32.8
18.62.6
OCC Comprehensive Tax Reform Package
180 Dundas Street W., Suite 505 Toronto, ON M5G 1Z8 T: 416-482-5222 www.occ.on.ca
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Elimination of Capital
Taxes
Elimination of Capital
Taxes
Corporate Income Tax
Consolidation
Corporate Income Tax
Consolidation
Sales Tax Harmonization
Sales Tax Harmonization
Income Tax ReductionsIncome Tax Reductions
More Competitive
Ontario
More Competitive
Ontario
Lower Business Education
Taxes
Lower Business Education
Taxes
Sales Tax Harmonization
Impact on Business... cont’d
180 Dundas Street W., Suite 505 Toronto, ON M5G 1Z8 T: 416-482-5222 www.occ.on.ca
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Total Business Tax Relief by Sector — Annual Savings1,2 ($ Millions)
Sector HST Corporate
Income Tax Capital
Tax3 Total
Agriculture 30 15 s 45
Forestry, Fishing and Hunting 15 s s 15
Mining, Utilities, Oil and Gas 105 110 100 315
Construction 2,335 120 40 2,495
Manufacturing 510 405 305 1,220
Wholesale Trade 440 245 100 785
Retail Trade 265 100 55 420
Transportation and Warehousing 500 60 35 595
Information and Cultural Industries 565 80 85 730
Financial Services (except Insurance) (900) 535 520 155
Insurance (160) 150 5 (5)
Real Estate (20) 135 75 190
Renting and Leasing 105 25 40 170
Professional, Scientific and Technical Services 395 270 120 785
Other Services (except Public Administration) 280 170 75 525
Total Business 4,465 2,420 1,555 8,440 1 Represents the annual savings following the full phase-in of the tax measures. Savings do not include more than $700 million
annually in Business Education Tax reductions, targeted tax incentives proposed in the 2009 Budget and the enhancement to the Ontario Production Services Tax Credit announced on June 29, 2009, over $500 million in annual compliance cost savings from a single HST administration and up to $100 million in annual compliance cost savings from a single corporate tax administration.
2 Annual savings of less than $5 million are denoted by the letter “s” (small). 3 Capital Tax savings compared to the Capital Tax structure before the 2004 Budget measures.
OCC Comprehensive Tax Reform Package
Case Example: Dry Cleaner
180 Dundas Street W., Suite 505 Toronto, ON M5G 1Z8 T: 416-482-5222 www.occ.on.ca
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$5,090 $5,030
$60
$1,100
$900
$290
$200$290
(Dollars)
Sales Tax CIT Embedded RST
• Excludes reductions in the Business Education Tax and compliance cost savings from the single sales tax administration.• Sales tax payable after July 1, 2010 is due to the continued application of sales tax on insurance premiums.• The illustrated company is fictitious, however, figures are based on actual corporate administration data and Statistics Canada Survey data.
Current Tax + Embedded RST Burden (2009)
$6480
Tax Payable (2010)$960
Net Tax onBusiness
$5,520
Revenue: $200,000Taxable Income: $20,000
Annual Savings
OCC Comprehensive Tax Reform Package
Case Example: Manufacturer
180 Dundas Street W., Suite 505 Toronto, ON M5G 1Z8 T: 416-482-5222 www.occ.on.ca
Page: 15
$14,150 $13,440
$710
$6,600
$32,710
$ 1,2001,200
$5,400
$32,710
Sales Tax CIT Embedded RST
• Excludes reductions in the Business Education Tax and compliance cost savings from the single sales tax administration.• Sales tax payable after June 30, 2010 is due to the continued application of sales tax on insurance premiums.• The illustrated company is fictitious, however, figures are based on actual corporate administration data and Statistics Canada Survey data.
Current Tax + Embedded RST Burden (2009)
$53,460
$47,350
Tax Payable (2010)$6,110
Revenue: $5 MTaxable Income: $120,000
(Dollars)
Annual Savings
Net Tax onBusiness
OCC Comprehensive Tax Reform Package
Case Example: Retailer
180 Dundas Street W., Suite 505 Toronto, ON M5G 1Z8 T: 416-482-5222 www.occ.on.ca
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$4,300
$3,500
$800
$2,200
$400
$1,800
$1,060
$1,060
Sales Tax CIT Embedded RST
• Excludes reductions in the Business Education Tax and compliance cost savings from the single sales tax administration.• Sales tax payable after June 30, 2010 is due to the continued application of sales tax on insurance premiums.• The illustrated company is fictitious, however, figures are based on actual corporate administration data and Statistics Canada Survey data.
Current Tax + Embedded RST Burden (2009)
$7,560
Tax Payable (2010)$2,600
$4,960
Revenue: $600,000Taxable Income: $40,000
(Dollars)
Annual Savings
Net Tax onBusiness
OCC Comprehensive Tax Reform Package
Case Example: Coffee Shop
• Excludes reductions in the Business Education Tax and compliance cost savings from the single sales tax administration.• Sales tax payable after June 30, 2010 is due to the continued application of sales tax on insurance premiums.
• The illustrated company is fictitious, however, figures are based on actual corporate administration data and Statistics Canada Survey data.
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$5,080 $4,830
$250
$2,750
$500
$2,250
$1,470
$1,470
Sales Tax CIT Embedded RST
Current Tax + EmbeddedRST burden (2009)
$9,300
Tax Payable (2010)
$ 2,500
$6,800
• Excludes reductions in the Business Education Tax and compliance cost savings from the single sales tax administration.• Sales tax payable after June 30, 2010 is due to the continued application of sales tax on insurance premiums.
• The illustrated company is fictitious, however, figures are based on actual corporate administration data and Statistics Canada Survey data.
Revenue: $ 1 M Taxable Income: $ 50,000
(Dollars)
Annual Savings
Net Tax onBusiness
OCC Comprehensive Tax Reform Package | Sales Tax Harmonization
• To obtain additional information on the OCC’s efforts, go to:
www.occ.on.ca
• To obtain more information on harmonization, please go to:
www.taxharmonization.ca
180 Dundas Street W., Suite 505 Toronto, ON M5G 1Z8 T: 416-482-5222 www.occ.on.ca
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