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Jewelry tax may get the ax

Stephan Burnett
Northern News Services

Yellowknife (Dec 15/04) - The North's cutting and polishing industry could get a boost from a private member's bill in Ottawa.

A British Columbia MP wants the government to nix the excise tax on jewelry and Hilary Jones, director for Arslanian Cutting Works, says it's high time it was done.

Jones said the luxury tax was originally implemented by the federal government during the First World War to help pay for Canada's military commitment.

The excise tax is a 10 per cent levy paid by manufacturers, importers and consumers on the sale price of items manufactured in Canada, states the Canadian Jewelry Association's Web site.

Over the years, several items were removed from the luxury tax list, but not jewelry.

Jones said the Canadian Gemmological Association has been fighting the tax for "donkey's years."

"It's ludicrous that you can buy jewelry in the United States for less than jewelry manufactured in Canada," said Jones.

"It's ridiculous that you don't have to pay the luxury tax on a $1,000 fur coat, but you do on a ring costing $3 or more down at Wal-Mart," she said.

"Everyone in the business has their fingers crossed," said Jones.

The bill is also in keeping with the recommendations included in the National Diamond Strategy -- a process which is being heralded by both the governments of Quebec and the Northwest Territories.

Vancouver Island North Conservative MP John Duncan is championing the bill.

"As it turns out, this bill is quite popular. There's a strong degree of interest from the North and that's not too surprising," said Duncan.

Duncan said he has strong bipartisan support.

"I've already been told by the Bloc their membership is behind it and the NDP is behind it. I talked to two Liberals from Quebec and they both said they're firmly behind me," said Duncan.

Tax discourages

Premier Joe Handley says abolishing the excise tax on jewelry is something the Government of the Northwest Territories has been arguing for -- for several years -- because it discourages jewelry manufacturing in Canada.

Virtually all jewelry, including costume jewelry, is subject to the tax.

"The way it happens now, someone from outside Canada pays the 10 per cent and residents coming from outside Canada get a rebate on that, but a Canadian can not buy jewelry in Canada without incurring the tax. Canadians can buy jewelry in the United States and not have to pay the excise tax," said Handley.

"Theoretically, they should pay duty on the jewelry. But does it happen? I don't know. There's always some people that wear the jewelry back," he said.