On October 21, 2005, CBABC Vice President Frits Verhoeven presented the CBABC’s submission to the Standing Committee on Finance and Government Services. In its written and oral submissions, CBABC called on the Government of BC to remove the tax on legal services. On November 15, 2005, the Committee released its Budget Consultation Report.

The following are direct quotes from the Committee's Report:

PST on Legal Fees
Associated with the government’s PST streamlining program, we heard from the legal profession and the business community that the collection of PST on legal services should be reviewed to ensure fairness:

“The tax on legal fees is incompatible with the government’s goal of creating a competitive business environment in BC. The tax inflates the cost of doing business in British Columbia, relative to other jurisdictions where no such tax is imposed, notably Alberta and Ontario. We recommend that the provincial government eliminates the seven percent social service tax on legal services — the only professional services in BC subject to the sales tax.” (Canadian Bar Association, British Columbia Branch).

Tax Reductions
The Committee recommends that:

• The government continue to monitor provincial taxation rates to ensure taxation levels remain competitive vis-à-vis competing jurisdictions in North America.
• The government consider the gradual reduction of the Provincial Sales Tax (Social Service Tax) to 6 percent based on current fiscal projections. In addition, the government continue to pursue the provincial sales tax streamlining initiative, in an effort to provide clear, uncomplicated rules concerning PST collection while reducing the administrative costs to small business.
• The government examine the removal of PST on legal services in British Columbia.
• The government review the exemption levels for first-time home buyers under the Property Transfer Tax with a view to making homes more affordable for first-time home owners.
• The government review and consider either the removal of the luxury vehicle surtax, or the increasing of the surtax threshold, on trucks or vehicles built on truck frames.

For a full copy of the Report, see: www.leg.bc.ca/cmt/38thparl/session-1/fgs/reports/Rpt-FIN-37-5-FirstReport-05Nov15.htm.

For a copy of the CBABC's submission to the Committee, see: www.cba.org/BC/Initiatives/pdf/tax_submission_10_21_05.pdf.

CBABC will be meeting with the Ministers of Finance and Revenue on November 21 to discuss this issue. We continue to advocate strongly for the elimination of the tax, and we encourage individual lawyers and their clients to talk to their MLA in this regard. For more information about our campaign, including draft client letters, please click here.

[posted November 16, 2005]