Canada is one of the top destinations for exporters, and the government’s proposed changes to its income tax system would likely lead to a surge in exporters’ sales tax bills.
But some exporters and analysts say they don’t expect a major tax hike from this year.
“The new tax would be small in scope and impact only the largest exporters,” said Dan Hui, chief economist for the Canadian Chamber of Commerce.
“It would not be very significant.”
The Canadian Retail Federation (CRF), the country’s biggest trade group, said the new tax might be enough to make some expats happy.
“We believe it would be very beneficial to exporters to see GST and/or PST be significantly reduced in scope,” the CRF said in a statement.
But while exporters are happy with the proposal, it is not clear whether it will be enough for many businesses.
“This is a proposal that’s a lot of pain, a lot for a small percentage of exporters.
It will be a problem for a lot,” said Michael Kriv, chief executive of the Chamber of Technology, Information and Communication Technologies (CTIT).
He added that businesses would be reluctant to invest in infrastructure if they were not likely to see the tax go away.
“I would like to see this tax go,” said Kriv.
“My hope is it will.”
The CRF added that the “gaps” between the new and previous tax would not cause the economy to shrink.
The government has already said it would increase taxes on imports, with the biggest increases expected on products such as vehicles, food, clothing, electronics and more.
The tax will also apply to certain goods that are imported to Canada, such as agricultural products, foodstuffs and foodstamp products.
Some companies, however, are already planning to increase their tax bill to comply with the new rules.
For example, the Canadian Federation of Independent Business (CFIB), which represents the countrys biggest corporations, said it was preparing to hike its sales tax bill by 25 per cent, adding that its sales taxes will rise by at least $3.2 billion next year.
Some exporters have also already said they will continue to invest money to comply.
“Our plans are to maintain our existing business strategy to attract and retain investment, while working toward the long-term goal of making the country more competitive in a global economy,” said Paul Whelan, president and CEO of the National Association of Manufacturers (NAM).
Whelans company, the American Petroleum Institute, has said it will invest $300 million in the United States to help offset the GST and $200 million in Canada to support its exports.
However, it’s unclear how much the new taxes would have an impact on companies’ profits, and how many of them would have a positive impact on the economy.
The CRP also expects that many businesses will be less likely to invest, which would affect the economy as a whole.
“Many of these companies will likely remain competitive in the long run,” said Hui.
“But the short-term impact of this tax will be minimal, if any.”
What are the GST/PST changes?
In 2018, the government announced a new tax that would increase sales taxes by a total of 0.75 per cent on the value of all goods sold to Canadians.
This change will apply to goods imported into Canada and those made outside of Canada.
The new tax will take effect in January 2020, but some exponents and analysts believe that the tax will only make up a small portion of the total increase to the tax bill.
According to data from the Canadian Council of Chief Executives (CCE), the tax increased sales taxes on goods by $1.5 billion between January 2019 and January 2020.
Some experts believe that businesses could see a significant increase in their taxes.
“There is a perception that businesses will see the impact of the tax increase, but this is not the case,” said Daniel Hui of the CRP.
“They are likely to have to raise their prices in order to compete with imported goods, so there is a potential for an overall impact to be limited.”
According to the CCE, the GST has a negative impact on a company’s bottom line because it creates a tax burden on the company’s shareholders.
However Hui noted that companies do not need to be profitable to file GST returns.
“Companies that are profitable will be able to file their GST returns without the need for increased tax,” he said.
In 2018 and 2019, the amount of taxes paid by companies in Canada was around $2.4 trillion, according to the Canadian Revenue Agency (CRA).
But this year, the CRA says that it will collect an estimated $5.9 trillion in unpaid tax.
In a statement