Many British Columbia restaurant owners plan staff cutbacks if the province carries through with its planned shift to a harmonized sales tax, according to a recent survey.

The Canadian Restaurant and Food Services Association surveyed a few hundred of its 4,000 B.C. members and found two-thirds plan to cut staff and another six per cent said they'll shut down if the HST is introduced, association president Garth Whyte said in a news release.

Premier Gordon Campbell and B.C. Finance Minister Colin Hansen announced July 23 that B.C.'s HST will combine the five per cent federal GST with the seven per cent provincial sales tax for a harmonized 12 per cent tax, starting in July 2010.

At that time, Campbell said the HST would boost the economy, but food industry leaders believe it will do the opposite.

"We're going to have a seven per cent increase in taxes on the consumer when they come to restaurants – it's going to really hurt us and it's going to reduce consumer spending," said Whyte.

The way the HST will be applied means the province's consumers will pay extra tax on items such as restaurant meals, airline tickets, funerals and haircuts – all of which were previously exempt from the PST.

'Restaurants unfairly penalized'

The association's western vice-president, Mark von Schellwitz, believes the tax is unfair because only restaurants and not grocery stores will be penalized.

"We've got a situation where you can a buy a frozen ready-to-heat pizza that's completely tax free, and yet the pizzeria around the corner that's employing six people to prepare that same pizza, has to pay a 12 per cent tax," von Schellwitz told CBC News Wednesday.

The restaurant association said it surveyed 365 members between July 29 and Aug. 4, and claims the poll had a margin of error of plus or minus five per cent 19 times out of 20.

NDP Leader Carole James opposes the proposed HST .

"The only way they can fix it is to withdraw the HST. That's the only way they can fix this betrayal to the people of British Columbia," she said.

Former B.C. Social Credit premier Bill Vander Zalm has written an open letter opposing the HST, saying it could lead to a taxpayer revolt.

Hansen is meeting with industry leaders over the next two weeks to look at a number of options, but he indicated that withdrawing the tax is not one of them.