FOR IMMEDIATE RELEASE
MARCH 2, 2006
VANCOUVER – The B.C. Chamber of Commerce and the Canadian Bar Association today released a study by noted economist Dr. Rosalyn Kunin, and called on the B.C. Government to eliminate the Provincial Sales Tax (PST) on legal services. The study cites the tax as a penalty on doing businesses in B.C. and a drag on the province’s economic competitiveness.
The Kunin study found that the PST on legal services is “regressive” and “inefficient”, and that the revenue the Province gains from collecting the tax is coming at a price to the B.C. economy.
“Fundamentally we are taxing enterprise in B.C. when we tax legal services,” said Roslyn Kunin. “Such things as investment, new business registrations, intellectual property protection, and property transactions involve legal services. Taxing these services, especially when competing jurisdictions such as Alberta and Ontario levy no such tax, puts B.C. at a disadvantage. As tax policy goes, this is not the way to make us more competitive,” said Kunin.
“The Kunin study showed what our members have been telling us, it is consumers and businesses who pay this tax through the inflated cost of goods and services,” said John Winter, President of the B.C. Chamber of Commerce. “It also hits industries like biotechnology, information technology, film and new media hard as they are large users of legal services, exactly the kinds of industries communities are looking to for future economic prosperity. Our members have been crystal clear on this issue; this regressive and discriminatory tax must be abandoned as soon as possible,” said Winter.
“Coming on the heels of a recent B.C. Appeal Court decision concluding that the tax is unconstitutional in many cases, the Kunin study should be the final nail in the coffin for this tax,” said Meg Shaw, President of the BC Branch of the Canadian Bar Association. “The courts have determined the tax is an impediment to accessing justice. Dr. Roslyn Kunin has determined the tax is bad for the economy. No matter how you look at it, there is no reason for the Provincial Government to continue collecting this tax,” said Shaw.
The Kunin study, available online www.cba.org/bc/pdf/reports/kunin_report.pdf showed that:
- The PST increases the cost of doing business in British Columbia relative to other jurisdictions – namely Alberta and Ontario, where no tax is applied to legal services.
- The tax is a particular burden on new-economy businesses that are heavy users of legal services – businesses like biotechnology, IT, film and new media.
- The PST is a “tax on capital” and most economists are opposed to such taxes because they reduce economic growth which in turn reduces government revenue.
The British Columbia Court of Appeal recently declared the tax unconstitutional in part because it is contrary to the Charter of Rights and Freedoms, to the extent that it infringes upon the fundamental right of access to justice. Disagreement about the scope of application of the Court's decision has resulted in a great deal of uncertainty and cost for businesses, consumers and the legal profession.
For more information contact:
Canadian Bar Association BC Branch
Toll Free 1.888.687.3404
President and CEO
British Columbia Chamber of Commerce
604.683.0700 (ext 304)
About the Canadian Bar Association: The Canadian Bar Association is the professional organization responsible for representing the interests of lawyers, representing more than 36,000 members across Canada and more than 6,200 lawyers in British Columbia.
For further information: please contact:
CBABC Associate Executive Director