BURST
The B.C. government’s decision to expand the provincial sales tax to services, such as bookkeeping and security, has the potential to bankrupt small businesses, warn business and public safety advocates.
The government’s budget last week announced it would be charging PST on up to 30 per cent of the cost of professional services, saying it keeps B.C. in step with other provinces.
The tax will also be applied to architectural services, engineering, rental and strata management and geoscience services as of Oct. 1.
Ryan Mitton, B.C. legislative director for the Canadian Federation of Independent Business, said the changes add a burden to businesses already struggling as a result of the economic downturn and the rise in theft and property crime.
He says businesses need support to deal with these costs, not added taxes.
“There’s been an outpouring of frustration, because the No. 1 thing businesses didn’t need going into this budget was another new tax,” said Mitton.
“We’ve heard from small businesses that are spending thousands of dollars a month on security and a seven per cent increase is a huge hit when your bill is in the tens of thousands of dollars.”
He said the complicated nature of PST compliance is another burden that small businesses often complain about and that adding another layer to it will only increase the time they have to spend doing paperwork, with costs passed to customers.
Caren McSherry, the owner of Gourmet Warehouse on East Hastings in Vancouver, said she is already spending over $7,000 a month to ensure her store has security seven days a week.
She said that she can bear the costs because of the size of her business, but knows many of her small business colleagues cannot.
“I’ve voiced my opinions so many times, and it falls on deaf ears, and pretty soon, there won’t be any more privately owned businesses left because they haven’t got the wherewithal to survive,” said McSherry, adding that a lot of her colleagues have had to close their businesses.
“I’m large enough that I can survive for now. Who knows how long? I mean, we will keep going until we can’t. But I don’t know what to say. The climate in B.C. is not favourable to business.”
Although the government did earmark $139 million more for public safety in this year’s budget, that is not enough to address the scale of the problem, says Jess Ketchum of the Save Our Streets Coalition.
He said that adding an additional tax is just piling it on businesses.
“So many small businesses, as you all know, are fighting for their very existence right now. As they represent the largest employment block in B.C., we should all be concerned about that,” said Ketchum.
“Sixty-three per cent … say they wouldn’t even go into business if given the opportunity to do it again. That’s pretty chilling when you think about all those people who go into small business with so many hopes and aspirations, and the number of jobs they create, the investment they generate, the tax revenue they generate.”
It isn’t just added security costs that are causing headaches. Many businesses are also reliant on other services such as accounting.
Allen Hewitt, owner of North Western Property Management, says his company spends around $20,000 on accounting annually and that the PST will add about $1,400.
He said that the added cost isn’t much for his business in the grand scheme of things, but it does make him think about how much more business-friendly the governments of Alberta and Washington state are.
Premier “David Eby feels that small business is just a door to open when he or the budget needs more money,” said Hewitt. “It just sucks, because small business has just been absolutely hammered since COVID from their five-sick-day policy to the employer health tax and then to this.”
Finance Minister Brenda Bailey said she understands the strain that many businesses are under, which is why the government didn’t raise the small business tax rate.
She also said the government has created a new program to target repeat property crime offenders that is similar to the work they are doing to address repeat violent offenders.
“I know that some people are reacting to the question of PST increases on businesses, but it’s really important … that we’re aligning ourselves with other provinces, our PST tax base is not as robust as other provinces,” she said.
“I think it’s also really important to point out that this is part of us being able to continue to put our arms around health care and education, and that’s what this budget does as well.”