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Many businesses 'not prepared' for return to provincial sales tax

Allan Asaph, executive director of Abbotsford Chamber of Commerce - File photo
Allan Asaph, executive director of Abbotsford Chamber of Commerce
— image credit: File photo

A B.C. Chamber of Commerce survey has found that 63 per cent of businesses do not feel prepared for a return to the PST/GST, and 73 per cent do not feel they've received adequate information.

Allan Asaph, executive director of Abbotsford Chamber of Commerce, said he's hearing "lots of questions" from local businesses as the transition back to the Provincial Sales Tax and Goods and Services Tax.

Undoing the harmonized sales tax (HST) and establishing a modernized version of the 60-year-old provincial sales tax is the biggest task facing Premier Christy Clark's government in the brief legislative sitting that precedes the May 14 provincial election.

Finance Minister Mike de Jong introduced the transition legislation last Wednesday. It includes provisions for transactions that straddle the transition date such as new home purchases.

The bill to replace the HST runs nearly 200 pages, and it will add accounting costs for business as well as taking away business input tax credits that match those available under the federal Goods and Services Tax. The government has given itself a deadline of April 1 to make the switch for the 2013-14 fiscal year.

The administrative burden of the switch starts with businesses reprogramming cash registers and other systems to go back to collecting two separate sales taxes. One of the few modern touches to the new PST is the ability of more than 100,000 businesses to register online at www.gov.bc.ca/etaxbc/register, and view online instructions to help make the transition.

About 30,000 B.C. businesses have started up since 2010, and operators may have no experience with the old sales tax system.

"Any increase in red tape and paper burden on a business is always stressful," Asaph said.

He emphasized that businesses do not need to register with the federal government for the GST, since they're already registered via the HST. But they will need to register with the B.C. government for the PST.

To further clarify the process, the Abbotsford Chamber is hosting a "Return to PST" information seminar on March 8 at ABC Restaurant from 8:30 a.m. to 11 a.m.

Restaurant meals are among the items which will be PST exempt once again, but Paul Esposito, the owner/operator of Finnegan’s Pub and the Phoenix Lounge, said he doesn't think the transition away from the HST will generate a major bounce for his business.

He said the province's beefed-up impaired driving laws, instituted in 2010, have proven a deterrent to potential customers, and he doesn't believe they'll be lured back by a reduction in sales tax.

That said, Esposito acknowledged his customers were displeased when the HST came into effect.

"Your blue collar workers who came in after work for a beer or two, they were very, very upset," he said.

"The HST, I believe, is a very good tax. What the government needed to do was make a few adjustments to consider the working people. They didn't do it. Should you be paying HST on a pair of kids shoes? No. They should have made some exceptions."

Provincial sales taxes on restaurant meals, haircuts and other services will be removed as of April 1, but one companion tax is being kept in place. Private sales of vehicles, boats and aircraft are exempt from GST, but the province levied a 12 per cent provincial tax on the transactions to equalize treatment of used vehicle sales between dealerships and individuals.

The government vowed to reinstate the old PST at seven per cent after the HST was rejected in a province-wide initiative petition. The HST was imposed in 2010, extending the provincial sales tax to a range of services.

– with files from Tom Fletcher

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