Finance minister defends HST, not all businesses buying
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Updated: September 15, 2009 11:04 PM
It will take a lot more marketing savvy by B.C. Finance Minister Colin Hansel to upsell the proposed Harmonized Sales Tax to at least one Shuswap restaurateur.
Ingrid Sakomoto and husband Tom were busy prepping and serving meals last Wednesday afternoon at their newly opened Salmon Arm restaurant, Oishii Express. Meanwhile, next door in the Prestige Inn ballroom, the finance minister was selling the HST, which will eliminate the current seven per cent provincial sales tax and replace the federal GST.
With sweat on her brow, Sakamoto pauses long enough to explain that from what she knows of the looming, so-called “value-added tax,” she is fearful of how customers will react when it rolls out in July 2010.
“I don’t know enough about it but, initially, it means more out of pocket, and in today’s economy, that’s tough,” says Sakomoto.
Under the HST, restaurant diners, who currently only pay the five per cent GST, will see their bill taxed by 12 per cent. Hansen explains that in many cases consumers will benefit with the HST because of the elimination of billions of dollars in provincial sales tax that is built into the cost of items. The minister predicts, however, that it will be two years before these savings are realized by the consumer.
Hansen concurred the restaurant industry in B.C. is one that will have a hard time with the HST, and said he’s working with restaurant associations on coming up with solutions. He noted, however, that the HST will result in a “big win” for restaurants, pubs and lounges as the HST on alcohol sales would be rebated to the business, ideally resulting in a saving to the consumer.
“Whether you come out ahead or not ahead depends on how much you drink,” Hansen joked.
The finance minister admitted the province has been considering a value-added tax for years. Ontario, B.C.’s main competitor for attracting industry, is also about to adopt the HST. Hansen said there’s trillions of dollars of investment waiting for the economic recession to bottom out and, when it does, he wants the B.C. to be in a competitive position.
The bottom line repeated frequently by Hansen is that businesses will be able to receive HST rebates for most goods were rebatable under GST.
Not all business owners were buying into the HST. Skookum Cycle and Ski owner Tom Peasgood said he was concerned how the tax would impact the province’s goals to be the healthiest and greenest province in the country (bicycles are currently PST exempt). Barley Station owner Stu Bradford says the restaurant industry expects to lose $750 million in the first year and that will mean job losses.
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