With Quebec’s election now over, brokers in the province are waiting to see how the new government is organized before pressing ahead with proposals to help reduce the impact of tax harmonization.
Quebec’s broker association, the Regroupement des cabinets de courtage d’assurance du Québec (RCCAQ), recently carried out a consultation to accurately determine the impact of the QST/GST harmonization slated to take effect on January 1, 2013.
The consultation found that brokerages in the province, many of them small businesses, would be hit by an additional operating cost of nearly 10% of their taxable purchases as a result of the QST harmonization.
“Brokerage firms will have very little room to manoeuvre when it comes to minimizing the consequences of increased expenses,” the RCCAQ noted in a letter to its members. “This is because the major insurance companies set the prices of their products and often dictate their commission levels when not competing directly with smaller firms via direct sales to consumers.”
The RCCAQ met with officials of Quebec’s finance department on July 4, presenting various options that would help offset the effects of the QST. One was the introduction of a refundable tax credit, while another was the complete abolition of the compensation tax.
The government was expected to come back with a response by the end of July 2012. But the recent provincial election, won by the Parti Québécois, has delayed a response to the brokers’ proposals.
“Since the RCCAQ seeks to defend brokers’ socio-economic interests, particularly in dealings with government agencies, we have been following the provincial campaign closely and we are waiting to see how the new government will be organized before going forward with our next actions,” the RCCAQ said in a recent update in September.