Topshelf News for May 2011
INFORMATION, IDEAS & INSIGHTS FOR SHELFSPACE MEMBERS
May 2 , 2011
Message from the CEO
Family Day in BC
Message from the CEO, Mark Startup: HST Referendum Why Retailers should vote “NO”!
Without question, the flawed and controversial introduction of the HST laid the foundation for a politically motivated and misinformed anti-HST campaign; all of which culminated in widespread misunderstanding of the tax and the resignation of Premier Campbell. I believe that when you cut through the emotion, political intrigue, and negative publicity, the HST will have a positive impact on the BC economy, retailers and the retail community as a whole.
Let me be clear that retailers dislike collecting and remitting consumption taxes almost as much or more than consumers gripe at having to pay them in the first place. Also, it is important to know that while many retailers don’t like the short-term impact the HST has had on their own business, they realize that the HST will eventually lead to growth in higher paying jobs in their communities and a stronger economy.
But now that it’s here even those retailers who passionately opposed the HST are supporting it because it has not been as disruptive as prophesized by the anti-HST lobby, retail sales have continued to increase in spite of the HST, and it would be costly to revert back to a GST/PST regime. While there are several good reasons why I would urge retailers and their customers to vote “No”; perhaps the most compelling motivation to stay with the HST is to prevent the return of the PST, which was a complex, inequitable, flawed and anti-investment tax.
To illustrate a glaring flaw in the PST, I recall receiving a phone call several years ago from a sales associate with a large national department store chain, bitterly complaining she felt party to a crime every time an adult abused the PST youth exemption by signing the exemption form.
To further emphasize the inequity, the PST youth clothing exemption rules required the retailer to be accountable for fraudulent claims…for example, when the adult claiming the youth exemption was Marilyn Monroe or John F. Kennedy.
The PST kept school supply retailers up at night trying to figure out the complex exemption rules and worrying about whether or not they had been properly applied. At times school supply retailers would find themselves arguing with customers at the point of sale on what products were or were not tax exempt.
Whether you’re for or against the HST, there are compelling benefits for retailers. Under the HST, retailers can claim a 12% input tax credit on business inputs such as capital improvements, supplies and equipment, which reduces the overall cost of doing business. Second, retailers are much better off with one collection and remittance process. Under the GST/PST retailers completed between 16-24 remittances annually depending on whether the company remitted on a monthly or quarterly basis. With the HST, most retailers will remit 4 times a year and the HST rules are much easier to follow.
Anti-HST advocates claim that one of the HST’s most negative outcomes is a $1.6 billion tax shift from businesses to the consumer. There is no denying that the cost of some services will increase with the HST. However, I believe there is a trade-off to the advantage of the retail industry. The HST enables goods producing manufacturers and exporters to reduce the price of their product (as a result of reduced tax compliance and the input tax credit), sell more goods on the international market, and generate more profit. These companies will re-invest that profit in their existing employees and increase the number of people they employ.
We’ve heard a lot about the extra cost of a haircut; but does the barber in Kaslo paying the HST want to serve a higher number of well-paid forestry workers, or does he want the same or fewer customers which would likely be the case with the return of the GST/PST?
It’s time to ignore the ”sky is falling” politically motivated rhetoric coming from the anti-HST lobby and examine the HST dispassionately. Virtually every economist of all ideologies in BC and Canada support the HST as a far better alternative to the PST. While there are a few passionate voices in the retail community opposing the HST, most retailers view it as a “no brainer” or have quietly accepted the transition to HST and have focused on something of greater importance than the HST …serving their customers.
Family Day in BC: The Impact on Local Retailers
Following on the heels of the rapid introduction and implementation of the minimum wage in BC, retailers must prepare themselves for the implementation of Premier Christy Clark’s second major campaign promise…the introduction of Family Day in BC.
Although Shelfspace empathizes with Premier Clark, retailers are concerned Family Day will have a significant financial impact on their businesses when compounded with the staggered increase in minimum wage to $10.25 by May 2012.
Introducing a new statutory holiday during the winter months will mean that BC will be on par with SK at 10 statutory holidays and one more compared to the rest of the country. It also means families will likely be out shopping, dining, visiting entertainment venues and/or travelling. Many retailers will remain open to serve their communities and will incur incremental holiday pay while experiencing a decrease in productivity. These added costs in turn may be passed along to their customers during a time when price comparison shopping is at an all-time high, locally, across the border and online.
Shelfspace agrees that a day for families during the long stretch between New Year’s and Easter is great conceptually, but the majority of the retail community, the largest employment sector in BC, will not be able to spend it with their families.
As an advocate for retailers in BC, Shelfspace and the Retail Council of Canada will be meeting with Stephanie
Cadieux, Minister of Labour, Citizens’ Services and Open Government to discuss ways Family Day can be implemented and the impact to retailers. Shelfspace proposes that Family Day should be an unofficial holiday like Boxing Day and Easter Monday, leaving it to the discretion of employers and staff to remain open.
