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Small businesses in BC, ON not ready for HST

By CO Staff @canadaone |

Small business owners in Ontario and BC are not ready for the coming HST changeover on July 1, says a new survey from Intuit Canada.

Fifty-four per cent of small business owners in Ontario and 47 per cent in British Columbia said they won't be ready when the HST comes into effect.

On July 1, Ontario and British Columbia will join Quebec and the four Atlantic provinces in charging the HST. Saskatchewan and Manitoba will continue to charge their own retail sales tax. Provincial sales tax is not charged in Alberta.

Top of mind with small business owners are concerns about increased price sensitivity, consumers looking to buy in other provinces and the overall feeling that the new tax regime was not needed.

  • Over 60 per cent of business owners said they do not understand the need for a new tax regime.
  • More than 80 per cent of business owners in the two provinces (82 per cent in BC and 91 per cent in ON) are worried that the new tax will make consumers more price sensitive.
  • More than half of respondents (63 per cent in BC and 54 per cent in ON) are worried that the new tax will cause consumers to shop in provinces that do not have HST.
  • The majority of respondents in both provinces clearly oppose the HST (76 per cent in BC and 79 per cent in ON).
  • Just under half of respondents (44 per cent in BC and 45 per cent in ON) said they had "not nearly enough time to prepare."
  • Less than 10 per cent of respondents (9 per cent in BC, 7 per cent in Ontario) felt they had enough information to prepare for the new tax.

Sixty-three per cent of businesses in BC said that the transition credit available in Ontario would have helped them deal with the transition, while 71 per cent of businesses in Ontario likely to receive the credit said they do not consider it to be effective.

Small business owners are sceptical about the predicted benefits of the HST, which is expected to reduce costs for business.

Intuit found that across the board few believe the harmonized tax will produce the promised efficiencies, such as saving time and money, and making small businesses more competitive.

Only 38 per cent of BC respondents and 39 per cent in Ontario acknowledged "saved resources" as a benefit and just 13 per cent in BC and 23 per cent in Ontario believe HST would make businesses more competitive.

Poor communication about the benefit of the tax seems to have affected the way small business owners view its benefits, especially in BC.

When respondents in BC learned how the HST can streamline their financial and administrative work, 49 per cent increased their support for the tax. An additional 28 per cent of small business owners in BC said they will increase their support if the HST does boost investments and jobs.

Ontarians were less optimistic.

Thirty-four per cent agreed that they would increase their support for the tax once they understood the financial and administrative benefits, while 16 per cent said they would increase their support for the tax if it boosts investments and jobs.

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