Harmonized sales tax will raise ticket prices

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      Last season was tough for Nancy Cottingham Powell. Caught by the economic meltdown that saw endowment-fund contributions shrink, the general manager of the Pacific Baroque Orchestra was faced with an $80,000 deficit, and in December put out a plea for charitable contributions. Not only that, but Powell was tasked with hiring a new artistic director after Marc Destrubé resigned the previous season.

      Luckily, supporters stepped up, and in May the PBO was able to announce the appointment of celebrated harpsichordist Alex Weimann to fill Destrubé’s place. But Powell is facing more battles: the prospect of a 40-percent cut by the province to core arts and culture funding by 2010-11, as outlined in the government’s three-year service plan released in February; the threat of her annual $37,000 gaming grant being reduced or axed altogether as the Ministry of Housing and Social Development conducts a review of its programs; and now, the impact of a harmonized sales tax on her bottom line.

      “We’re very vulnerable right now to all these changes,” she told the Straight in a phone call. “We haven’t found our feet, and if we want to see the PBO continue into its 20th-anniversary year [2010-11], we need a break right now”¦.It [the HST] is going to increase our ticket pricing, which is going to impact on our audience development.”

      Powell is far from alone. The arts community, like the restaurant sector, has greeted the HST with concern. The Arts Club Theatre, the Vancouver East Cultural Centre, Touchstone Theatre, and Music on Main have all said they will likely be forced to raise ticket prices.

      On the other hand, could provincial revenues garnered from the HST help offset the proposed arts cutbacks? While Finance Minister Colin Hansen has claimed the tax will be revenue-neutral, a 2008 study from the C.D. Howe Institute suggests otherwise, projecting the province will reap $4 billion in revenues from the HST over a three-year period. In addition, by signing on to the HST, the province will receive a $1.6-billion transition payment from Ottawa.

      While Hansen has played coy about the extent of this year’s deficit—admitting previous estimates of $495 million were off but refusing to divulge a new figure—Helmut Pastrick, chief economist for Central 1 Credit Union, has pegged it at around $1.5 billion, and Jock Finlayson, executive vice president of policy for the Business Council of British Columbia, has estimated it could run as high as $2 billion.

      Arts Minister Kevin Krueger was unavailable for comment. Graham Currie, spokesperson for the Ministry of Finance, was noncommittal, although he admitted the tax would bring in revenue. “The intention is to bring the HST in July 1, 2010, so we won’t begin to see revenue from this until well into next year,” he said. “Other revenue and funding decisions—that will come with the September budget update.”

      As for HST rebates for nonprofit arts organizations, Currie said, “They’ll continue to get the GST rebate, that 50-percent rebate, and a partial rebate of the seven-percent [provincial tax] portion of the HST.” He could not specify the percentage of the partial HST rebate.

      As far as NDP finance critic Bruce Ralston is concerned, there’s no upside for arts groups should the HST proceed. “I think for most organizations the impact of the PST rebates will be relatively small, compared to the hit they’ll take on the other side—on their ticket prices,” he told the Straight by phone.

      For Powell, the tax is just one more burden to overcome. “For the success of the PBO at this moment, we must increase our audience base. And it’s pretty hard to do that when you keep increasing pricing,” she said. “What are they [the government] doing? Are they supporting us? Are they bailing us out? Or are they creating more burden and more challenges that some of us might not be able to overcome?”

      Culture is a big economic engine

      > Less than 0.05 percent of the B.C. budget is invested in the arts.

      > For every dollar invested in the arts, B.C. recoups $1.38 in direct taxes.

      > B.C.’s arts and culture industry generates $5.2 billion annually.

      > B.C. is the only province that has elected to shrink its investment in the arts as a response to the economic downturn.

      > Provincial funding in B.C. makes up an average of seven percent of performing-arts organizations’ operating budgets, which is the lowest percentage in the country.

      Source: Alliance for Arts and Culture, Canadian Conference of the Arts




      Aug 13, 2009 at 4:03pm

      Ridiculous! If $7.00 extra tax on a $100 ticket is the deal-breaker, you shouldn't be going to the show. User-pay tax is far better than punishing everyone by raising income tax.


      Aug 21, 2009 at 3:12pm

      In Canada, we assume that user-pay is not always the best way to go (education, health care, highways...). HST on non-profit tickets is a burden that should be avoided.

      Let's look at lower-priced tickets: Audience members want an "all-in" price, and often stop buying when prices end up being much higher than advertised. So if you're paying $35 gross for a ticket purchased online at Tickets Tonight, here's how it breaks down at present:
      $4.00 ticket handling
      $1.48 GST
      $29.52 net to the community-profit (non-profit) organization

      With HST, the community-profit org will absorb an additional $2.03, losing 6.9% on every single sale. That $2 will need to be passed on to the audience members eventually.

      When we talk about tickets to events that cost between $20 and $35, audience members tend to be price sensitive. And administrators of the community-profit (non-profit) organizations that produce the events tend to be over-burdened administratively already.