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The province is writing off over $250,000 owed to government as a result of unpaid taxes by a number of individuals and businesses in P.E.I.
Finance Minister Wes Sheridan says it’s a last resort, but something that must be done when Island residents and businesses owners cannot meet their financial obligations to the province.
“Your heart goes out to many of them who have worked so long in a business and because of the downturn in the economy in 2008 there were certain pressures put upon them,” Sheridan said.
“But the fact of the matter is, this is what banking institutions do and this is what (government) must do.”
Cabinet documents show the provincial government is writing off a total of $258,321. The majority of this amount is money owing under the Revenue Tax Act, but a small portion is also unpaid environmental tax, charged to recycle tires.
The Little Mac Shoppe Inc., formerly located in Charlottetown before quietly closing its doors last spring, has the largest amount owing on the list of debtors with $38,587 outstanding.
The shop’s former owner John Cox told The Guardian a new marketing strategy implemented by Apple last fall made it impossible for him to compete as an independent store.
He said he even borrowed against his wife’s house to try to keep the store open.
“I tried for years to keep that store going and every year we paid the taxes out of our own resources, hoping someday it would work, but we finally ran out of money and lost everything,” he said in a written response to The Guardian.
“We held out until about March, but just couldn’t keep going any longer. Those last six months were what finally killed us.”
Other big tax bills being written off by the province include $31,773 owed by Seatreat Restaurant, which closed its doors several months ago in Charlottetown, and $25,216 owed by 100385 Inc., a numbered company carrying on business under the name Pizza Shack in Tignish.
Although the province is not likely to recover any of these funds, the write offs will not affect the government’s bottom line.
A doubtful provisions account will absorb these tax revenue losses. Currently the province’s doubtful provisions account stands at $2.5 million.
Also, having these tax bills written off does not necessarily mean those individuals and businesses are off the hook for their bills.
“Unless they have gone bankrupt, these debts stay on our books and if they resume business in any kind of format then we are able to collect these outstanding amounts,” Sheridan said.
The fiscal year is not over, so there could be further write-offs later this year. Last year the province wrote off over $460,000.
Sheridan says overall, this represents less than one per cent of all provincial revenues.
He added he has a lot of compassion for those Islanders and business owners on the other end of this transaction.
“I’m not about to throw stones at these companies or individuals who have debt owing to the province. This is not something they would ever choose.”