The Canadian government has agreed to gradually phase out the 10% Excise Tax on jewelry.

Canada’s 2005 budget includes a plan that will eliminate the tax by 2009. The first tax cut, which reduces the rate to 8% went into effect Feb. 24. Thereafter, the tax will be reduced by a rate of 2% per year on March 1 of each year till 2009.

The Canadian Jewellers Association along with many of the country’s retail jewelers has been fighting the tax for years. The CJA considers the move by the government a victory for retail jewelers.

“While we were clinging to the hope that the government might give the jewellery trade a full repeal, we can ready ourselves to be rid of the tax by 2009,” says Carmen Rivet, CJA president.

“We have effectively argued that the tax prevented us from creating more jobs for Canadians, hurt our ability to compete with off-shore manufacturers and importers and prevented us from benefiting from our own growing diamond industry,” adds Mo Charania, CJA’s Government Relations Chair.

A government committee that drew up the budget proposal said that phasing out the excise tax on jewelry ensures equitable treatment of the Canadian jewelry industry and recognizes that jewelry is available at all price levels and enjoys widespread consumption among Canadian households.

The government said that the measure will reduce federal revenues by $20 million in 2005–06 and by an additional $20 million each year thereafter, to $100 million per year when fully implemented.

JCK