Lee Flanders (left) owner of Klassic Kuts Barbershop

Lee Flanders (left) owner of Klassic Kuts Barbershop

Tax impact felt around the block

As B.C. residents ponder the pros and cons of their vote in the Harmonized Sales Tax (HST) referendum, the Trail Daily Times simply had to look around at its neighbours on Cedar Avenue in downtown Trail for a cross-section of businesses and the impact, good and bad, of the HST. Some businesses offered opinions others preferred to stay silent. Here’s what we’ve learned from our business neighbours.

The Harmonized Sales Tax referendum ballots will be landing on the doorsteps in Greater Trail in the coming weeks and with it will come a big decision for voters.

It was a hot button issue for the province before it was even implemented and hasn’t cooled off since.

Now citizens have the chance to get rid of the HST and go back to the PST/GST system when they mark their ballots and return them to Elections BC.

The government mailed out a voter guide earlier, which included a government statement on the referendum, position statement from both sides of the debate and an independent panel report.

In that guide, the pro-HST camp emphasized that the HST helps small businesses grow.

Not true, said Lee Flanders, owner of Klassic Kuts Barbershop. He said since the HST was implemented customers wait longer before they come to get a haircut, which ultimately affects his bottom line.

The amount of paperwork he has to do also increased.

“I’ve had to increase my cut prices and customers aren’t happy, they don’t see why they have to be taxed for a haircut,” he said.

Jordan Kulik, manager of Lovin’ Oven Café and Catering, said it’s difficult to say just how much his business has been affected by the HST.

“It’s a really tough question to answer simply because Trail’s a really strange place for people’s spending habits,” he explained.

“It’s really hard to assume whether it’s the HST that has affected things. I’ve noticed some business down but to pinpoint exactly where it’s coming from? I’m not really sure.”

In his mind, he said he thinks people who could afford to go out weren’t going to make a huge change in their habits just because an extra seven per cent was tacked on to their final bill.

But from a business perspective he has to dish out more money for items that used to be PST exempt. Although he should get a portion of that back after claiming taxes, it’s a matter of saving as much money as possible versus receiving a rebate a year later.

“I think it’s hurt me, the business guy, because small businesses have such a small profit margin going on that I’m taking some of this money from that small profit margin and having to put it into other places whereas before I didn’t.

“And all those pennies add up in a huge way, especially in the restaurant industry where profit margins are so low.”

He’s managed to avoid increasing his prices so far, but that doesn’t mean the past year has been easy.

“I’m having a really hard time dishing out that little extra money even though I know it’s sort of like a savings account in a way, yet at the end of the year nobody’s going to give me the interest on the money that I decided to take away from my very low profit margin.”

Even the biggest business on the block has felt the affect of the HST.

Kootenay Savings president and CEO Brent Tremblay said services the credit union pays for has increased their operating costs by over half a million dollars a year, which indirectly impacts their customers.

Tremblay said from a planning perspective the credit union was shocked to find out just how much the HST was going to cost them when it came into effect.

The bottom line for the credit union is that under the HST they are not able to reclaim some of those costs, while under the old system they were able to claim credits for them.

“At the end of the day, our members and communities are the ones that are impacted by it because if it’s costing us over half a million dollars then that’s half a million dollars less that we have to put back into the community or pay to our members through profit share.”

A study done by Ipsos-Reid that was conducted June 12 showed that 54 per cent of British Columbians were in favor of getting rid of the HST, while 46 per cent favored keeping it. Over one thousand residents were surveyed.

July 22 is the deadline for HST ballots to be returned. After that, the rest will be history.

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