Businesses in N.B. expect benefits and drawbacks from sales-tax holiday
15 per cent tax will be eliminated on several categories for 2 months starting Saturday
Shoppers in New Brunswick can look forward to saving 15 per cent on their holiday shopping when it comes to items such as books and puzzles, children's clothing, toys and video games.
But many local business owners are struggling to adapt to the change, which was only announced in late November and goes into effect today.
"We didn't have enough time really to have a very proper in depth research about what's happening," said Celeste Nel, owner of Once Upon a Child in Moncton.
The list posted by Ottawa has a lot of caveats. For example, children's sports equipment like body suits and ski jackets are tax-exempt, but ski boots and wet suits aren't. Toys or games marketed for adults don't count either, even if they're being purchased for a child.
"It's a first for everybody and some companies have much more to do than others depending on what their store looks like," Nel said.
Because Once Upon a Child mainly sells children's items, the majority of its products fall under the tax holiday. But some larger ticket items they stock don't count.
"I think currently only car seats are really covered, which is great because it's an expensive thing for most parents to purchase," she said. "However, I feel having a baby is still quite an expensive thing for people.
"I do feel that some of the baby equipment would have been nice for new parents starting out, to include that for them, like bassinets or strollers."
Indirect costs
While the federal government's decision to drop the sales tax for two months isn't costing businesses directly, there will be indirect costs associated with changing point-of-sale systems, the equipment a store uses when customers pay. There will also be additional accounting, businesses say.
"It's going to cost them more money to administer — some of them $1,000 or to $2,000 — to reprogram their point-of-sales terminals," said Frédéric Gionet, a Moncton-based senior policy analyst with the Canadian Federation of Independent Business.
The federation surveyed 3,500 of its members and found only four per cent who responded had positive feelings about the tax holiday.
"Every small business needs to sit down and interpret what the Canadian Revenue Agency wanted them to do," he said.
"So they're quite frustrated and they don't believe that's going to add anything more to their sales."
Businesses have had a few weeks to try to interpret the new regulations, but Gionet worries customers will have even more difficulties when they come into effect.
"It may be confusing the customer as well, expecting that certain things are tax exempt and then they're not."
Gionet said the federation has launched a campaign to provide small businesses with posters that explain the HST break and encourage positive interactions with staff.
"Don't take it out on the poor merchant who's doing their best at this time," he said.
A busy time of year
With the HST on pause until Feb. 15, some business owners are hoping it will bring more customers through their doors.
"People will be more excited to spend more because they are having like 15 per cent off because they are not paying HST," said Bhargav Kevadiya, owner of Hynes Restaurant in Moncton.
Kevadiya said things are simple at Hynes, because all of their sales will fall under the tax holiday category of prepared food.
"It's easier for us," he said. "But I have noticed that like other business owners it would be more complicated because what is included and what's not, that's not clear."
Kevadiya said the point-of-sale systems at the restaurant were being updated overnight Friday, so that everything would smoothly on the first day of the tax break.
"The government is helping to getting more money in customer's pockets, which is good. But in terms of business owners there are little complications. We need to keep our accounts clear so that we don't get audited."
Hoping for leeway
When it comes to the confusion faced by some businesses, the Canadian Federation of Independent Business said it's hoping the Canada Revenue Agency will be forgiving of mistakes made in the midst of the tax break.
"We're asking the Canada Revenue Agency to be lenient on those who make mistakes and maybe, suspend some penalties and fines for those who have been trying their best out of goodwill and made some mistakes, but because the rules are quite convoluted," said Gionet.
At Once Upon a Child, Nel is hoping for the same thing.
"We are trying to do our best," she said. "But obviously with the short notice we are trying to make sure we are covering all the bases and hope that we are not making any mistakes in doing this process."
When the tax holiday ends, New Brunswick businesses will have to reverse the changes and go back to charging 15 per cent HST.
"I think it's a very big stress [at] Christmastime for many stores to figure it out," Nel said.
"So I do hope that they will be more lenient with this because it's not intentional that people are making these mistakes."
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