B.C. business owners fight HST
Vancouver fitness guru Ron Zalko has been pumping up opposition to the harmonized sales tax for months. In a phone interview with the Georgia Straight, he estimated that “thousands” of people have signed the anti–HST petition at his Kitsilano gym.
After the HST is introduced on July 1, his clients will have to pay an additional seven percent on their memberships, on top of the five-percent GST. “Those who provide fitness and health and keep people from being sick get punished,” Zalko said.
He added that a taxi driver recently told him about his concerns regarding the HST. It will add seven percent to the cost of fares. According to Zalko, the man said that every time there is a price hike in the industry, he gets fewer passengers and his income falls.
Zalko then copied former U.S. president Ronald Reagan’s famous comment about the Berlin Wall by declaring: “I would say, Mr. Campbell, tear this HST down.”
Fight HST, the group led by former premier Bill Vander Zalm, claimed on June 14 that it has collected 653,240 signatures opposing the tax. This is equivalent to about 40 percent of the number of people who voted in the 2009 B.C. election.
Another Vancouver businessperson who’s collecting signatures is Gabriel Yiu, a former provincial NDP candidate and the owner of three flower shops. He told the Straight by phone that the B.C. Liberal government is spreading false information by suggesting that the HST will help businesses save on administration costs.
Yiu said that it only takes him three minutes each month to file provincial sales tax with the government. “At the end of the month, the computer provides those figures: the total sales, how much PST we collected,” he claimed. “By removing that, it doesn’t save us any personnel. It doesn’t save us much time.”
However, it will cost his business some money. Yiu said that’s because merchants receive a 6.6-percent commission from the government for collecting the provincial sales tax up to a maximum of $198 per month. “That means in an entire year, we almost got $2,400 in commissions,” he said. “After the HST comes in, this commission will be gone. Actually, it’s not a small amount for a small business.”
Proponents of the tax, including Premier Gordon Campbell, say that companies will be able to obtain refunds for sales tax they pay in the course of doing business. According to the B.C. government, this will collectively reduce business taxes by $1.9 billion per year.
Yiu said that while this may be true, his company will have to charge higher prices for flower deliveries because couriers will be forced to charge an additional seven percent. “With an additional seven percent, it will make some of our business disappear,” he claimed.
Ian Tostenson, president and CEO of the B.C. Restaurant & Foodservices Association, told the Straight by phone that the HST could lead to some big job losses in B.C.’s food and beverage sector, which he characterized as a $10-billion industry. If business were to drop by the same amount as the new meal tax—seven percent—that would translate to a loss of 12,000 jobs and $700 million in revenue. He said that if business fell by only 3.5 percent, that would mean a loss of 6,000 jobs in his industry.
Prior to the 2009 election, Tostenson joined several other business-association heads in condemning the NDP platform, alleging that the party would hike job-killing payroll taxes. He didn’t express regret over this, claiming that the B.C. Liberal government has been very good for business.
“I’ll probably get shot for saying this: it’s possible that HST, in the long term, is good for the economy,” Tostenson said. “I get it. Most business guys get it.”
He suggested that the real problem is the soft economy. Tostenson said he recommended that the government phase in the tax over two or three years to ease public concerns and maintain consumer confidence.
“I think the optics of that, politically, were probably not that great,” he said. “You don’t want to keep having a tax coming each year.”
Does the harmonized sales tax favour big businesses over small companies?
“The larger and more traditional a company is—we’re talking forestry, mining, fishing—those types of industries will benefit. They have a lot of input costs and they make a lot of capital purchases.”¦It’s not beneficial to restaurants because you don’t pay HST on labour and you don’t pay HST on food. So there is no tax for you to capture.”
“The big businesses can write off and do their reconciliation. They’ve got big spending and big returns. For them, it may be profitable. I think this is what Mr. Campbell is trying to say to us. But the small businesses? I don’t think they’ll benefit from it because, you see, the bottom line is the consumer. Are they going to pay the extra [seven percent] or not? No, they won’t.”
“I’ll have smaller expenditures, but I would have that same benefit to my company [as a big firm gets with the HST]. The other hat, of course, is as a consumer, as a mother, and a person that needs to buy their normal goods in society. That’s where I’m going to be taking the money I saved in my company and just spending more personally to cover the additional seven percent charged on things.”
“For a small business like us, we’re not capital-intensive. We could claim [a rebate] if we buy a cash register or a computer.”¦The problem is, how often do small businesses buy computers or cash registers? But, say, for a big mining company or a big forestry company? Yeah, this is quite a big amount of tax that they could save. But for small business, we’re not benefiting.”