VANCOUVER – B.C. businesses seem largely unprepared for the return to the old provincial sales tax once it takes over from the much-hated HST in April, say business groups who are hoping their members come out of the holiday season with resolve to deal with it sooner rather than later.
The B.C. government announced Wednesday businesses can now register to collect the old tax as the province switches back following the defeat of the HST in a province-wide referendum in 2011.
John Winter, president of the B.C. Chamber of Commerce, said making sure the 400,000 business owners in the province are informed of the coming change has been tough.
“We’ve got our work cut out for us,” he said in an interview.
He said the chamber polled its members at the beginning of December and found 65 per cent of respondents were either unaware they were going to have to collect the provincial sales tax and the federal goods and services tax separately, or they were unprepared for it even though they were aware of it.
“There’s a serious concern here, a bit of a disconnect that needs some more work,” Winter said, noting the chamber and the government have been working together for months.
“The message is not getting out there and that’s the big concern.”
The government has posted its registration documents online and business owners can also print their registration to send by mail or fax, or they can deliver it in person.
The government said in a news release business outreach began in October and November to explain the timeline for the PST.
Chambers of commerce and business organizations have been offered seminars covering the principals of the PST and business owners who need help can book a one-on-one consultation with a ministry tax specialist.
The government said so far, over 800 requests have been received and 160 completed.
Online seminars are also being offered and there is a toll-free number to answer questions.
The government said more than 100,000 businesses will need to register to collect the PST and about 30,000 of them are new and have only existed under the HST.
The 12 per cent harmonized sales tax took over from the provincial sales tax in July 2010 to much anger. It was a combination of the five-per-cent federal GST and B.C.’s seven-per-cent PST.
But it meant services such as haircuts and gym memberships were subject to a 12 per cent tax, whereas before they had been exempt from the PST. Restaurant meals and bicycles had also been exempted from the PST.
Anger over the tax helped force former premier Gordon Campbell from office and prompted a provincial referendum, which defeated the tax in 2011. The government announced it would return to the PST in April 2013 after a lengthy period of rebuilding the system to collect it.
Kimball Kastelan, a policy analyst with the B.C. chapter of the Canadian Federation of Independent Business, said with the deadline in April, registration probably isn’t top-of-mind with most business owners right now.
He noted the Christmas season is critical to many and small businesses, in particular, don’t have accounting departments to look after such details.
“We’ve been doing our best to publicize this pending deadline, but the reality is, for a large majority of them, it’s really just now coming into focus on their horizon.”
He said the worry is business owners will delay for the next several months, leading to a frantic glut as March closes.
“If there’s going to be a problem, it’s that we’re going to come down to the wire with a lot of people with a lot of questions trying to get through to government respondents who may find themselves overwhelmed.”
Winter noted that although the province is returning to an old way of doing things, the renewed PST is somewhat “revamped.”
Significant changes include allowing businesses to file their PST remittances online, filing them less frequently and filing in coincidence with the federal filing.
Winter is also concerned consumers will be affected if the switchover doesn’t happen smoothly. Consumers will be angry if they end up getting charged inappropriately by businesses that haven’t informed themselves of the changes in time.
Winter and Kastelan declined to speculate whether prices for will drop for those things that will no longer be subject to the HST, such as restaurant meals or haircuts, saying it will depend on individual business owners to decide whether they want to lower their prices or hike them.
“That’s really in the hands of the individuals that do business,” said Winter.
“They may see this as an opportunity to raise their prices in a way that is as painless as they might ever do it, but I wouldn’t want to say that’s what’s going to happen.”