President’s Guest Editorial, Vancouver Sun
[excerpt published March 7, 2006]
The provincial government can be applauded for balancing its books, but it has a long way to go before it can point to a rational and competitive tax system. The most glaring case in point: the tax on legal services.
Lawyers don’t pay this tax, their clients do. And their clients are individuals, business owners, corporations, institutions – anyone who needs legal advice or representation to do business in this province or (like injury victims) just to solve the problems of daily life.
For no good reason that anyone can understand, the BC government charges an extra 7% tax on legal services. No other profession’s services are subject to this tax in BC, and our competitors in Alberta and Ontario do not have to pay it. With a bow to our neighboring province’s “Alberta Advantage,” just think of the tax on legal services as “The BC Disadvantage”.
For businesses in particular, this is an important issue. Legal business is being done in other provinces that could and should be done here – because it’s 7% cheaper to do business elsewhere. This added cost is also a factor in BC’s ability to attract and retain ‘hot’ emerging industries – biotech, hi-tech and film, for example – in fact, any industry that is a high user of legal services to protect intellectual property and business interests.
The latest nail in the coffin for the tax is a report by economist Dr. Roslyn Kunin, called Open for Business? An Analysis of the Tax on Legal Services. Check it out at www.cba.org/bc. The bottom line? The cost of retaining this discriminatory tax is dragging down BC’s economy.
The tax is a bizarre throwback to another era – it was a 1992 initiative proposed by Glen Clark and championed by Moe Sihota as a way to raise money they said would go to legal aid. It never did. Last year, the tax raised over $115 million. In total, it has brought over $1 billion into government coffers, on the backs of individuals and businesses who already pay personal and corporate taxes. This form of regressive double-taxation is simply a penalty on anyone who needs access to legal services.
There is no sound policy basis for it, and no rationale for its continuance. The Supreme Court of BC and the Court of Appeal have both declared it an impediment to accessing justice, yet the government continues its legal fight to keep the tax in place.
The rationale for keeping the tax? It generates revenue. This from a government that promised a New Era where “BC is Open for Business”.
The Canadian Bar Association and BC’s Chamber of Commerce have said “Enough!” We believe that it is plain wrong, not to mention economically absurd, for the government to continue to collect a tax that MLAs, the courts, businesses and economists have all acknowledged as unfair and discriminatory. That the government is using taxpayer dollars to continue a legal battle to collect this tax, is indefensible.
Our message to BC’s Government and Opposition members is simple: Do the right thing for BC – remove the tax on legal fees – now!
[posted March 7, 2006]