C-62 , 40th Parliament, 2nd session Monday, January 26, 2009, to Wednesday, December 30, 2009

The Library of Parliament does not prepare Legislative Summaries for appropriation bills, ways and means bills and borrowing-authority bills. The following is a short summary:

On 4 December 2009, the Minister of Finance introduced Bill C-62, An Act to amend the Excise Tax Act (Provincial Choice Tax Framework Act), in the House of Commons and it was given first reading.

Bill C-62 amends the Excise Tax Act to implement a harmonized value-added tax framework in Ontario and British Columbia. The bill puts in place a framework to accommodate any province’s decision to have the provincial component of the harmonized value-added tax under the Act apply in that province by achieving a common understanding with Canada as to

• the imposition of the provincial component of the harmonized value-added tax in respect of that province;

• the application of any element of provincial tax policy flexibility, including rate flexibility for the provincial component of the harmonized value-added tax, rebate flexibility in respect of the provincial component of the harmonized value-added tax and the temporary recapture of certain input tax credits in respect of the provincial component of the harmonized value-added tax;

• functioning and application of the Act, including provisions flowing from the provincial tax policy flexibility contemplated under the common understanding and the addition of every province that chooses to join the new framework; and

• administration, enforcement, and compliance under the Act.

The Province of Ontario and the Province of British Columbia (B.C.) have each signed a Memorandum of Agreement (MOA) with the Government of Canada that provides the framework for the introduction of a harmonized sales tax (HST) in Ontario and in B.C. The proposed HST would come into effect in both provinces on July 1, 2010 at a rate of 13% for Ontario and 12% for B.C. Subject to legislative approval, the Ontario and B.C. HST would use the same tax base and structure as the GST. The MOAs also allow Ontario and B.C. to designate a limited number of point-of-sale rebates of the provincial component of the HST and implement for a transitional period (which may be up to eight years) certain restrictions on allowable business input tax credits. The HST in Ontario and in B.C. would be administered by the Canada Revenue Agency.