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Maple Ridge business owner wonders over switch back to provincial sales tax
Russ Yazdgerdian may be learning the reality of the phrase, be careful what you ask for, you just might get it.
After opposing the implementation of B.C.’s Harmonized Sales Tax in July 2010, he’s now wondering if tossing the tax on April 1 will actually make it better for business.
The government announced it was cancelling the 12 per cent HST this April and returning to the seven per cent provincial sales tax and five per cent goods and service tax system after a 2010 referendum defeated the HST.
“I’m not optimistic. I don’t think business will come back,” he said Wednesday.
“For some reason, I’ve got a feeling my numbers, even after the HST [is repealed] are not going up.”
And while he opposed the tax when it was suddenly implemented by the B.C. Liberals, Yazdgerdian says perhaps the HST then should have been left well enough alone. Maybe former finance minister Kevin Falcon instead could have consulted with the business community and just lowered the HST to an even 10 per cent, he suggested.
Yazdgerdian owns Meadows Cleaners in Valley Fair Mall and said when the HST came in and raised the tax his customers paid from five per cent charged by the federal Goods and Services Tax to 12 per cent under the HST, business took a dive. It dropped by about five per cent the first month, a bit more in the months following, before settling at about 15 per cent below what it used to be.
But in the two years the tax has been in place, Yazdgerdian is wondering if now perhaps the public has adjusted and may not be so eager about going on a spending spree once the old system returns.
The HST even favours small business. He notes that the PST rebate cheques he’ll now get from the government will be less than what he received under the HST, although he’d rather just have more business come in through the door. He also wonders if the government will bring in as much revenue.
For Rob Grimm, with Portrait Homes in Silver Valley, the introduction of the HST and now the reverting back to the GST/PST, hasn’t so much as discouraged building as make it more confusing, and more costly to home buyers.
“It was just a distraction and again it comes down to the last minute.” He was again waiting to read government instructions on how the new tax will be rolled out.
“The biggest thing is the uncertainty.”
What about house purchase contracts that close after April 1? he asked. “We don’t even know what the rules are and what purchasers have to pay.”
It’s only now that the regulations have come out about returning to the old system, he pointed out.
Accountant Greg Andrews with Meyers, Norris, Penny, provided businesses with the basics of what they have to do at the Maple Ridge-Pitt Meadows Chamber of Commerce Business Summit and Trade Show last week.
Andrews said businesses have to convert their cash registers so that they apply both the five per cent Goods and Services Tax and the seven per cent Provincial Sales Tax after April 1.
They’ll also have to start charging tax on some products such as propane and remove part of the tax, such as the PST, from other products and services such as hair cuts and restaurant meals.
Andrews favoured the HST, although he disagreed with the sudden manner in which it was implemented, and pointed out that Ontario has accepted a similar tax.
“I think if you have the referendum today, it would be quite a bit different.”
“I think the anger was, people were more furious at the government at the way it was brought in.”
Most countries in the world have a similar system, he added.
With the deadline looming for switching over, Andrews said it would make sense for businesses to buy equipment before April 1 so they can get the 12 per cent in HST rebated.
After April 1, only the five per cent GST will be rebated on such input costs.
The same would apply for a car bought for business purposes before April 1. For the average car shopper however, there are no breaks. The tax payable will remain at 12 per cent before and after the change.
One addition however will be the introduction of the “garage sale rule” which exempts businesses that make under $10,000 in sales annually from having to collect or register for the provincial sales tax.
Andrews said he’s always favoured the HST which puts the tax on to the end user, the consumer.
“It’s what most countries in the world are doing. It’s what most provinces in Canada are doing.”
• Call a toll-free number with questions about the new PST (1-877-388-4440), or e-mail questions to CTBTaxQuestions@gov.bc.ca.
Registration for PST will start on Jan. 2, 2013. The government has issued a bulletin, Registering to Collect PST, to help businesses understand whether they need to register.