HST in BC: Business Responds to the Tax

Is the BC HST the monster its detractors say it is – or a tool to make the province competitive in the global market? From mining to restaurants to retail, we’ve polled the HST responses of BC’s biggest business sectors.

BC HST – is it good for BC | BC Business
Could the hated BC HST actually create 100,000 new jobs in BC in the next 10 years?

Is the BC HST the monster its detractors say it is – or a tool to make the province competitive in the global market? From mining to restaurants to retail, we’ve polled the HST responses of BC’s biggest business sectors.

It’s the most hated tax in British Columbia. Less than six months after its implementation, it’s forced the resignation of Premier Gordon Campbell – and it’ll soon be the focus of a controversial referendum. Is the HST in BC the monster crusaders like former premier Bill Vander Zalm say it is – or a tool the province needs to remain competitive in the global market, as economists suggest? From mining to restaurants to retail, we’ve asked how B.C.’s biggest business sectors are responding to the HST.

Although BC finance minister Colin Hansen claims it’s too early to see the real impact of the HST, economists expect the tax to create over 100,000 new jobs in BC in the next 10 years. First on our list is the mining sector, where the annual savings are estimated at $80 million. Mining loves the HST.

Mining and BC’s HST

Byng Giraud is vice-president, corporate affairs, at Imperial Metals. His company is trying to extend the life of Huckleberry Mine, an open-pit copper and molybdenum mine located in central BC, which it co-owns with a foreign partner. The HST is an important consideration in Imperial’s decision-making process. The tax could translate into $400,000 in savings every year – about 4% of the company’s tax outlay.

“The money we’d make wouldn’t go into somebody’s pocket. It would be reinvested in BC, at places like the Red Chris Mine – an area with a 40% unemployment rate,” Giraud says. A decision about the future of Huckleberry Mine is coming in the spring of 2011, and the HST will influence it.

Huckleberry Mine manager Bill Mracek sees the benefits of the HST daily. He likes that the HST is simpler than the old PST/GST regime. “We had to keep track of everything, and the province would regularly send auditors,” he says. “That time and effort are no longer needed. And that means we can be more efficient than we used to be.”

Manufacturing and BC’s HST

To a lesser degree, manufacturers also welcome the death of the old PST/GST. “The administration of the PST had become both confusing and complicated concerning when and how to apply the tax,” says Dan Reader, president of Murrey Latta Progressive Machine. “It had to go.”

For him, BC’s HST means a lot of small savings. “We already had certain tax incentives in the manufacturing process, but now with the HST there are savings equivalent to the previous PST contained within the costs of our business not directly related to the manufacturing process,” he says. The savings range from the costs for natural gas to office equipment.

Restaurants and BC’s HST

Restaurant owners have been the most vocal about their anti-HST feelings. In a recent report, the Business Council of BC admitted the big challenges the industry was facing because of the HST.
For the service industry, the HST meant a tax increase of 7 per cent with no compensation. In August, a Canadian Restaurant & Foodservices Association survey of its members found an average revenue loss of about 11 per cent. Says Western Canada VP Mark von Schellwitz: “It could cause marginal businesses to close their doors.”

Five months after the HST’s implementation, he claims the losses still range from 5 to 20 per cent. The much-debated reduction in allowable blood-alcohol for BC’s drivers has also hit restaurants in the wallet. Von Schellwitz’s association is lobbying the government for compensation: “It’s a $10-billion industry. We’re under siege, and we looking for any help we can get.”

Small business and BC’s HST

Many in small business in BC expected HST losses that simply never appeared. “I thought it was going to hurt in July, but it didn’t happen,” says Bob Ianson, owner of Heirloom Linens, a retail shop in Victoria.

Described partly as a tool to simplify the accounting of small businesses and save money, the HST was sold as bigger and better than it was, says Ianson. “I’m in the supply business: my costs haven’t changed. As for accounting, everything is computerized. Really, it doesn’t make a difference.”

A supporter of the tax, Ianson is nevertheless uncomfortable with the way it was presented to BC voters. He is not alone. “As an individual, I see it and I notice it. My concern is not the tax, but with the way it was implemented.”

“I share the sense of outrage,” echoes Huckleberry’s Bill Mracek. “Having said that, I think it’s a good tax.”