Financial services group targets capital tax elimination for Ontario budget

A group representing Toronto’s financial services industry is asking the Ontario government to look at elimination of capital taxes. The Toronto Financial Services Alliance (TFSA), which includes the Insurance Bureau of Canada (IBC), released its pre-budget submission to the new Ontario Liberal government, asking for a tax system that would encourage business growth in the province.Specifically, the TFSA is targeting capital taxes, asking the province to set up a schedule for eliminating all capital taxes, which is says act as disincentives to business. “The cost of doing business in Ontario is much higher than that of its competitors as a result of its fiscal policies,” the submission notes.For insurers, the TFSA wants to see the provincial premium tax eliminated. This tax has been reduced in recent years, but Canadian p&c insurers contend that this tax, which higher than that charged in the U.S., acts as a detraction for companies considering doing business here. As well, other jurisdictions allow this tax to be credited against corporate income taxes, or vice versa. The submission also notes that the tax “has the perverse effect of taxing the capital of insurers at the same time that the government requires insurers to maintain minimum levels of capital to remain solvent and stable”.The submission also asks for a reduction in corporate taxes and further investment in Toronto’s infrastructure as incentives to business.