Friday, May 2, 2008

CHECK AGAINST DELIVERY

Good afternoon everyone and thank you to the Ontario Chamber of Commerce for giving us this opportunity to speak to you today about our taxpayer-focused corporate tax harmonization initiative. After all, you and your members were some of the strongest proponents of the initiative and I thank you for your assistance in making this project a reality.

As Ontario's Minister of Revenue, I am going to speak about what has happened to get us to today and then I'm going to hand things over to my colleague, the Honourable Gordon O'Connor, Minister of National Revenue who will talk about the great work that is still to be done and what changes you can expect as we move toward a single harmonized corporate tax return.

The Government of Ontario wants to help businesses do what business does best: create jobs and foster a strong economy. We know that business simply MUST have support to compete, to create jobs and contribute to the economy.

We also believe that an effective and efficient tax administration system is a significant part of the foundation for that support.

We believe in a corporate tax administration system that is efficient, fair and flexible — a system that supports compliance AND reduces the burden on business.

This move to a single corporate tax administrator is one of the most significant changes to Ontario's tax administration in more than a generation. After all Ontario has been self administering its corporations tax program for 50 years.. Since its inception successive governments have made changes to its structure but none had made changes as monumental as the move to harmonize corporate tax collection and administration with the federal government's tax authority, now known as the Canada Revenue Agency.

As you would expect, this move required both legislative change and a major transformation of the Ontario Ministry of Revenue's business processes. A year ago the Ontario Legislature passed Bill 174 the "Strengthening Business through a Simpler Tax System Act, 2007" which allows the Canada Revenue Agency to begin administering Ontario's corporate taxes for taxation years ending after 2008.

The CRA will administer Ontario's corporate income tax, corporate minimum tax, special additional tax on life insurers, and the capital tax. Ontario will continue to administer the mining tax, insurance premiums tax, payments in lieu of corporate taxes and transfer taxes imposed under the Electricity Act, 1998.

We also passed Bill 81, the Budget Measures Act, 2006 which gave us the legislative authority to negotiate and sign the Transition and Delegation Agreements that allowed us to transfer our audit, rulings, objections, and appeals functions to the Canada Revenue Agency a full 8 months before the introduction of the harmonized return in January 2009.

Now some of you may reasonably want to know what these changes will mean to you and your members.

To put it simply, before April 3, 2008, Ontario businesses, your members, had two tax authorities to deal with, two auditors, two objections and appeals systems and two tax advisory systems. This all changed on April 3, 2008, through a Delegation Agreement that was negotiated between the Government of Ontario, the Government of Canada and the Canada Revenue Agency.

Under this early transition, Ontario businesses now will only have to deal with one auditor who will do an integrated federal/provincial audit; one objections and appeals system; and one tax rulings and interpretations process for all pre 2009 corporate tax matters.

The next step is a single tax form; a single tax collector; and a single set of income tax rules for the 2009 taxation year and beyond.

These changes will reduce compliance costs for business and improve Ontario's competitiveness. Ontario businesses will collectively save up to $100 million annually in compliance costs from one corporate tax return, one set of tax rules, and one corporate tax administrator. That's not all — Ontario businesses will save an additional $90 million annually in Ontario Corporate Income Tax from a harmonized corporate income tax base.

This is a big shift in how government works. For years the business community has been urging the Governments of Ontario and of Canada to harmonize corporate tax administration as a way to improve productivity and we have listened, which is one of the reasons we are both here today.

The Government of Ontario is committed to creating a competitive environment for Ontario's businesses and taking concrete steps to build a vigorous economy that benefits all Ontarians. This initiative is just the latest example of how we are delivering on those commitments.

The recent 2008 Budget proposals also demonstrate this commitment.

Our government is proposing $750 million in tax measures over four years that provide support for businesses. These include eliminating the Capital Tax retroactive to January 1, 2007 for businesses primarily engaged in manufacturing and resource activities, and providing a 10-year Ontario income tax exemption for new corporations that commercialize intellectual property developed by qualifying Canadian universities, colleges or research institutes.

The 2008 Budget proposals build on the $1.1 billion in business tax reductions over three years proposed in the 2007 Economic Outlook and Fiscal Review. These include cutting Capital Tax rates for all businesses by 21 per cent, retroactive to January 1, 2007 and extending the lower Small Business Corporate Income Tax rate to more small businesses, retroactive to January 1, 2007.

These proposed measures are in addition to the government's plan to eliminate the Capital Tax for all business on July 1, 2010 and to reduce high Business Education Tax rates across the province by $540 million over seven years.

These tax measures are an important part of the government's five point plan to enhance competitiveness, and I am proud of the role that the Ministry of Revenue plays in delivering these measures.

In closing, I would like to personally thank the Ontario Chamber of Commerce and its members for not only allowing us to speak to you today, but more importantly for the thoughtful advice you provided to us throughout the Corporate Tax Administration Redesign process. Both the Premier and I appreciate your work and advice on this and many other initiatives.

Thank you, Merci

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