ICABC Budget Submission, 2006: Improving Competitiveness

In October, the ICABC at handed its recommendations for the 2006 provincial package to the government's Select Standing Committee upon Finance and Government Services.*

The ICABC told the committee that the nearest provincial budget should address three lock opener fiscal and economic issues: 1) enhancing competitiveness from one side a simplified tax system, 2) introducing a long-term obligation management plan, and 3) encouraging investment and innovation.

Enhancing competitiveness end a simplified tax system

In its submission, the ICABC stated that an important constituent of any tax policy changes should be the harmonization of the provincial social services tax (SST) with the federal advantageouss and services tax (GST).

The generally received tax system requires businesses to administer these sum of two units sales taxes separately-one at the provincial horizontal the other at the federal level-and this lack of harmonization translates into higher take away froms Harmonizing the sales taxes would not single reduce administrative costs for the couple government and business, it would improve EC's competitiveness above the long-term.

The ICABC advised that to effectively implement a harmonized combination of parts to form a whole three key areas of harmonization would ne to be addressed: protecting lower income British Columbians, ensuring that the overall impact is revenue-neutral for the BC conduct and addressing discrepancies in the application of the sum of two units sales taxes.

The ICABC commended that an implementation study be administrationed prior to any decisions being made about sale tax harmonization.

A long-term debt-management plan

Given the balanced bag legislation and projected surpluses in the coming years, the ICABC congratulated the management on its fiscal management. However, adding that more necessitys to be done, the Institute also identified the nearest logical step in BC's fiscal management: a long-term due reduction strategy that reduces the province's debt-toGDP ratio to 10% by the agency of 2015.

As noted in the submission, obligation reduction would provide the rule with the ability to reallocate more [i]or[/i] less of the $1.6 billion worn out annually on servicing the debit to other priority programs and services, of that kind as health care and education.

Also noted was the fact that debit reduction has recently become plane more pressing for BC because of Alberta's debit status. Our province may have the next to the first lowest debt-toGDP ratio in Canada, on the other hand Alberta declared itself completely debt-free this year after successive years of paying down its debit through legislated requirements. The fiscal flexibility Alberta now possesse may posture serious competitive pressures for BC in the years ahead. To reckoner this disadvantage, investors must have a clear picture of the BC government's plans for obligation reduction.

Encouraging investment and innovation

With regard to encouraging a positive investment climate, the ICABC stated in its submission that it was pleased with the reduction in the corporate income tax rate from 135% to 120% (September package Update). Pointing out that the corporate tax rate is individual of the key factors businesses consider when making investment decisions, the ICABC said the corporate tax chop is a clear sign of BC's commitment to attracting and retaining investment.

Moreover, the business tax reduction stirs BC closer to Alberta's rate of 115% and increases our province's competitiveness. The ICABC encouraged the rule to continue monitoring the tax policies of competing jurisdictions to make secure the ongoing competitiveness of BC's rates.

In confines of innovation, the submission identified R&D spending as the greatest in quantity widely recognized determinant of innovation in the economy. BC's prominence in the fastgrowing biotechnology sector partly explains the healthy expansion of R&D in this province in novel years. However, in terms of moving forward, the ICABC commended that the government continue to encourage innovation [i]or[/i] part of to the other targeted tax cuts.

The ICABC explained that the be deriveds will not only bolster the economy, on the other hand also filter down to individual British Columbians because productive workers attract the best incomes, and prosperity has a ripple consequence on all of our lives.

What's next?

The cull Standing Committee on Finance and management Services will issue its final report through November 15, 2005. The 2006 provincial parcel will be tabled on February 21 2006

A transcript of the ICABC's budget submission is available at www.ica.bc.ca.

* In addition to the ICABC's presentation in Vancouver and its formal written submission, a number of individual CAs around the province also made presentations to the Committee, including BC Council member Dan Little, CA, in Victoria, and Ron Tenisci, CA, in Kamloops.

By Craig Fitzsimmons, NATIONAL Public Relations

Craig Fitzsimmons is a public affairs practitioner with NATIONAL Public Relations.

Copyright Institute of Chartered Accountants of British Columbia Nov 2005

Provided through ProQuest Information and Learning Company. All rights Reserved