The federal government is proposing that starting Dec. 14, the GST/PST be removed from holiday essentials, including groceries, restaurant meals, drinks, snacks, children’s clothing and some gifts.
The proposed tax break would last until Feb. 15, which the government hopes will provide some relief at the cash register.
But at least two small business owners on the Sunshine Coast aren’t fans of the suggested tax break, including Courtney Lamb, owner of Talewind Books in Sechelt. Lamb said, since books are already PST exempt, it only works out to a five per cent discount, so not a huge saving.
“I see this as consumers being like, ‘It's an additional five per cent that we get off items, which is really great.’ So, potentially, there's more money for spending this Christmas and they'll want to spend more,” said Lamb. “The downside to this is, at the end of the day, it actually affects small businesses more.”
Lamb explained it will cost money to have the software used to manage Talewind’s sales, both in-store and online, manually adjusted, both at the beginning of the tax break and after it’s over.
“There's the money for taking it off and then there's the money for putting it back on in a couple of months,” said Lamb. “The other side of it is that, from what I've been reading, is what they're taking the GST off of is so vague that you're putting stress on small businesses to try and figure that out themselves.”
The list of goods is lengthy, but some items have qualifiers attached, including books. While printed books and audio recordings qualify, items such as magazines, colouring books, agendas or notebooks, do not.
When it comes to alcohol, spirits are excluded from the list, but beer, cider, coolers and wine are included — so long as they’re under seven per cent alcohol.
Meanwhile most food products do qualify, as do children’s clothing and footwear, excluding athletic shoes used exclusively for sports or recreational activities.
“There are really weird, arbitrary rules. And for us, a book is exempt from the rule, but then does that mean pens and journals that we sell are exempt as well?” said Lamb. “That's something that we have to try and figure out so in the end.”
She added, it also means having discussions with their bookkeeper and accountant to figure out what exactly is GST exempt.
“How do we track that? How do we pay the government back? So, it's actually costing small businesses a lot of money to try and implement something that the government is trying to do,” she said. “So, although this might seem like a good thing up front, the government is actually putting the onus on small businesses to figure it out.”
Lamb says her situation is not as bad as it could be due to software that’s fairly simple to deal with. She adds, that’s not the case with many businesses on the Coast. She notes there are many mom-and-pop shops that don’t even use software, which means everything has to be tracked, because they have to pay that tax to the government.
“Already doing GST is a big job within itself. I've got a bookkeeper/accountant that helps me sort that out. It's a lot of money for the five per cent being spent,” she said. “I'll be interested to see if that makes a difference or not. So, we'll see what happens. I think it could be good for big retailers and it could be good for consumers, but I think at the end of the day, it doesn't really help the little guy. I think there’s bigger things the government should be concentrating on.”
Paolo Espinoza, who co-owns Gourmet Girl Café and Catering in Davis Bay with wife Nicole Lachance, also isn’t optimistic the tax break will make much of a difference for their business.
“I will be interested to see, but I don't think it will make a difference. Five per cent is so minimal when it comes out to eating out,” said Espinoza. “You know, it’s just two months, too, so whether that will be significant enough for anybody to go outside to eat out or whatever.”
Espinoza does agree any financial break is a good thing but just wishes this one was more significant. In B.C., most food is already PST-exempt.
“GST, at five per cent is just such a minimum. For the average person, for us, for the business, it will save us a few bucks,” said Espinoza. “But no matter what, we still have to pay the cash anyways, right?”
The proposed tax break still needs to be approved by Parliament in order to be in effect by Dec. 14.
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