Retailers, grocers and other businesses say they will be busy in the coming weeks preparing for a proposed federal tax break on a number of items and services, though they’re skeptical that a GST exemption would spur more spending during the holiday season.
Teri Hustins is planning to work late on Dec. 13, long after her retail stores close, so that her online shop prices are up-to-date for the proposed tax break, which will omit GST charges on toys, groceries, books and more for two months.
“It can’t happen before the 14th, right? So it’s going to be a late-night work party with some pizza, just shifting the taxes on the things that are going to have the tax shifted off,” she said.
Hustins, the owner of four downtown Victoria retail stores, said it’ll be easy for her toy stores, Kaboodles Victoria and Two Otters Science and Nature Company, as it’ll just “be a toggle on the back-end.”
But for the novelty store Oscar & Libby’s, it’ll be a late night of going line-by-line through every listed item on that store to determine if they fall within the wide array of items proposed for a federal tax break between Dec. 14 and Feb. 15, she said.
In comparison, changing the prices for in-store purchases at her stores will be a breeze.
Those working the till will just have to press a re-programmed button on the register that will take off the right amount of tax for the goods starting Dec. 14, she said.
“I’m a little bit of a Luddite and an old school retailer, so we still use a cash register,” she said. “For other businesses, its going to mean a little bit more work and co-ordination with their IT support.”
Hustins thinks it would have made more sense for the tax cut to start on Dec. 1 so that it could encompass more of the holiday retail season — but acknowledged that 10 days might not have been enough time for businesses to prepare for the changes.
Brett Johnson, the store manager of the Strath Ale, Wine & Spirit Merchants on Douglas Street, admitted to an initial burst of panic when he heard of Prime Minister Justin Trudeau’s announcement on Thursday.
“And then I realized that it’s not that big of a change, at least on our system,” he said.
“But you never know. Maybe if you call me back in a week, I’m banging my head against the desk,” he said with a laugh.
There should be enough time before Dec. 15 to sort out any missing details, he said, noting that his store deals with a local point-of-sale company, which should be able to help if any problems arise.
Johnson said he’s still looking to learn exactly what the alcohol exemption will cover, as there is some ambiguity about what types of alcohol beverages will be exempt from the tax.
Trevor Watson, co-owner of Orca Dynamics, which provides point-of-sale products and services to businesses on Vancouver Island and the Gulf Islands, said it’s a “hellscape” out there for retailers who will have to deal with a tax change on top of their regular work.
“It’s going to cost a merchant a lot of labour hours to go through all these products to exempt the GST for just a few months of transactions,” he said. “The maintenance side of this is a nightmare, a living nightmare.”
While most retail databases will already use sub-categories to account for how different goods are taxed at different levels, the federal government’s proposed exemptions will not align with pre-existing categories, so businesses will have to go through their entire database “with a fine-toothed comb” to make sure they’re charging the right amount of tax for each product, he said.
The list of qualifying goods falling into the proposed tax cut is lengthy and wide ranging, including diapers and kids’ clothes, but also items such as newspapers, plush dolls, English muffins and bottled water.
Watson, who counts Island grocer Red Barn among his clients, said it’s going to be an “astronomical” amount of work for grocery stores, which can have tens of thousands of individual items in their inventory databases.
“If you don’t have it implemented and you open your store [on Dec. 14] and you’re charging somebody GST when they are supposed to have no GST on their cheese puff, they’re going to be very upset,” she said.
“And then they’re going to have to turn them back on again in a few months,” he said. “This is an astronomical amount of work.”
Garth Green, store manager for Fort Street’s Urban Grocer, said he’s still absorbing the announcement.
Green said it’ll be a “bit of a pinch” to go through the inventory of about 10,000 distinct products that are stocked at Urban Grocer, but he expressed confidence that they’ll be ready before Dec. 15.
He’s not sure if the GST cut will cause increased spending at his grocery store, calling the initiative “a shot in the dark.”
Ian Tostenson, president of the B.C. Restaurant and Food Services Association, said the tax relief — which applies to restaurant meals regardless of whether it is dine-in or takeaway — will likely have little effect in stimulating the restaurant economy.
By Dec. 14, the majority of Christmas dinners and other holiday-related restaurant functions will largely be over, he said.
While taking off the GST will be more straightforward for restaurants compared to some retailers, there will still be some edge cases, such as alcoholic beverages above seven per cent alcohol by volume, that will cause headaches for businesses and staff, he said.
The major benefactors of this tax break in the restaurant will likely be quick-service restaurants that focus on serving high volumes of customers, he said.
Justin Leifso, an assistant professor of political science at the University of Victoria, said the tax break will be welcomed by most Canadians.
Leifso, whose family growing up was not well off, said he remembers how difficult it was to make sure people could get gifts and enjoy a nice meal during the holiday season.
The tax break can be seen as a response from the Liberal government to the hammering they have received from opposition party critics over the increased costs of living in Canada, he said.
However, it’s unlikely the tax breaks will help the Liberal party’s political image, Leifso said.
It would take a “Herculean effort” in both public policy and messaging — and possibly a collapse in the popularity of the Conservative Party — for the deeply unpopular Liberals to rise again in opinion polls, he said.
