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$5 billion fall tax bill too much for B.C. business, NDP told

PST, employer health tax, hotel tax may come due Sept. 30
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B.C. Liberal leader Andrew Wilkinson speaks in the legislature, Feb. 26, 2020. (Hansard TV)

B.C.’s budget deficit is currently pegged at a record $12.5 billion, as the NDP government faces the beginning of a wave of business closures due to the COVID-19.

That’s four times the size of the last big deficit in 2012, when the B.C. Liberal government had to buy its way out of a rejected harmonized sales tax deal with Ottawa. And current B.C. Liberal leader Andrew Wilkinson has repeatedly proposed bringing it up to $15 billion, by forgiving the first 90 days of deferred taxes that Finance Minister Carole James has set for repayment by the end of September.

Collected but not remitted sales and hotel taxes, along with the government’s new employer health tax on payrolls, will total about $5 billion by fall, Wilkinson told the B.C. legislature July 15. Businesses who have been “running on fumes” for four months aren’t going to be able to repay it, he said.

James kept the door open to extending the repayment deadline, but has not commented on granting the tax holiday that Wilkinson has argued for in a series of letters to Premier John Horgan. The repayment schedule will be reviewed “well before we get to Sept. 30,” James said in question period.

“I’m afraid that kind of answer will be cold comfort to the thousands of businesses that are facing huge tax-deferred bills coming due this September, for which the minister refuses to provide an answer,” replied Abbotsford West MLA Mike de Jong, who preceded James as finance minister. “Families are facing work uncertainty or outright unemployment.”

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The Business Council of B.C. has not endorsed the idea of a tax holiday, but it is calling for an extension of the payment deadline through 2020 and a staged repayment plan that could extend to the end of 2021.

“With a very slow economic recovery and the enormous damage inflicted on many economic sectors by the virus and the measures taken to contain it, we believe there is a strong argument for extending the 2020 tax deferrals until the end of the year,” BCBC chief policy officer Jock Finlayson told Black Press Media July 16. “We are not recommending an extension beyond that point.”

With an uncertain future for the COVID-19 pandemic, which has plunged B.C. government revenues as spending has ramped up, accumulated debt is also a key factor.

“From an accounting perspective, the government is not ‘losing revenue’ with tax deferrals,” Finlayson said. “ Rather, it receives the money due with a delay. The only cost to the treasury is the interest paid on the extra short-term debt – which today is substantially less than one per cent. So there is very little impact on the size of the deficit.”


@tomfletcherbc
tfletcher@blackpress.ca

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