For most small businesses in B.C., the result of last month's HST referendum is not the victory claimed by the tax's detractors. But Premier Christy Clark's recent announcement of plans to convene a panel to review the province's tax structure is at least a step in the right direction.
"Anytime there's consultation, that's a good thing," said Shachi Kurl, director of B.C. affairs for the Canadian Federation of Independent Businesses. "With the HST, there was little to no consultation and you saw the results of that experiment."
The tax review is part of Clark's multi-faceted plan to try to boost job creation in the province.
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Kurl says the majority of small business owners in B.C. were in full support of the HST, in part because of the economic potential of a streamlined tax but also because the PST was not an easy tax to understand.
"It was a nightmare on the administrative side because of the nonsensical exemptions," she said. "For example, if you sold safety vests and your vests were orange, they were tax exempt but not if they were yellow.
"You would end up spending hours on taxation problems when all you really wanted to do was run your businesses."
Anita Huberman, CEO of the Surrey Board of Trade, says she agrees that the PST placed too much onus on small business owners to essentially be tax officers at the same time.
"They're concerned that they will have to go back to a tax system that was an administrative burden," she said. "This small business tax review committee needs to make administrative improvements in all the different levels of tax structure but especially with the PST."
Customer habits could change
The effect the switch back to the GST-PST tax structure will have on small business owners is up in the air since the HST will remain in place until January 2013 and the B.C. government has not issued any guidelines to prepare for the switch. Kurl says the majority of small business owners are taking a wait-and-see approach.
"The biggest issue now is uncertainty because it is going to take a while," she said. "For those who supported HST, the majority of our membership, they now have to look at how they can take advantage of this time when they still have the HST."
She says some small business owners are worried consumers may be more discerning with what they buy in the next 18 months, with some choosing to hold off on certain purchases until the HST is replaced.
"The big question is whether consumers are going to sit on the sidelines," she said. "If they see a benefit in waiting to buy something, how much could that cost small businesses?"
Huberman says real estate agents stand to lose the most if this consumer lull manifests itself.
"For many people, waiting 18 months to buy a house does not represent a significant amount of time," she said.
Tax credit program extended
As part of the announcement to review the province's tax structure, Clark also unveiled plans to extend the immensely popular $31 million apprenticeship tax credit program until 2014. Kurl says this program, available to employers who are paying wages to eligible apprentices, makes it easier for small business owners to take on extra help.
"It covers a lot of trades that the federal programs don't cover, like locksmith apprenticeships," she said. "These jobs may not be big industry jobs but there is a big workforce out there. It encourages small business owners to fill these positions."
The program also gives the apprentices an income tax credit. Huberman says it is important for small business owners to be aware of this program and others like it. "It's there to be used," she said. "There are so many government programs for businesses that are not used.
"From our perspective, education and continual training is really an economic fundamental in terms of moving our economy."