Harmonized Sales Tax and Restaurants

This is a topic that I know it will not win me any friends; in fact, there are chances I will garner more enemies. However, as they say, keep your friends close but your enemies closer… A couple of months ago, there was the announcement BC will implement a Harmonized Sales Tax (HST) replacing the current Goods and Sales Tax (GST) and Provincial Sales Tax (PST). The current GST and PST rates are 5% and 7% and the HST will be 12%. While it sounds like the tax we end up paying is the same, reality is there will be some shifts, i.e., where previously there were no taxes (or not at the same rate), there now will and vice-versa. This being a food blog, I will touch specifically on the topic of restaurants. (And, thanks to shokutsu of Foodosophy to bring this first to my attention).

When implemented in July 1st, 2010 (oddly, in Canada Day), when you go out to eat, your bill will have a 12% tax rather than 5%. Yes, whereas currently you are currently only GST taxed, now you will be hit by an additional 7%. Because of this, there has been a site set up against this issue called , leaded by Canadian Restaurant and Foodservices Association. Local commentator Bill Tieleman has also written about this. Now, I must mention that some parties are not necessarily against the HST; rather the way it will be implemented, i.e., a straight jump from 5% to 12%. Of course, everybody is entitled to their opinion and mine is…

(First, put a flame retardand suit, followed by a suite of armour to lower me THAC0… OK, that was too old school)

Bring it on… No, wait, wait. Before anybody starts throwing molotov cocktails, shoot me with a rail gun or slash me with a rapier, I am just like pretty much everybody who does not like to pay any more taxes that I should. However, it is just that the arguments that have been put forward does not necessarily convince me against the implementation of HST. Here are some examples:

1) Tax increase from 5% to 12%. Let’s put it into perspective how much it is that “increase”. So, if you were to order a burger with the works and it costs $10, currently you will end up paying $10.50. With the HST, it will be $11.20. If those additional $0.70 cents are too much, why don’t just cut the cheese/bacon (since additional toppings are usually over $1 each)? Hey, you could be doing double, as that slice of cheese or bacon can hit your waist as well… OK, jokes aside, while the increase is not something to overlook, I believe that is being blowned to proportions. Sure, it does add up but did anybody complain last year when almost all restaurants increased their prices due to the increase of fuel prices? People felt it was a fact of life and dealt with it. (Oh, on that note, the price of gas has now gone down but has anybody notice a decrease of prices in restaurants?) In fact, this week I noticed Timmy’s had notices due to increase of costs, they were forced to increase the price of their goods. Let’s just say they queue of people buying their coffee/donuts were about the same prior to the announcement…

2) There will be less people going to restaurants. Everybody, repeat after me: Eating out is a privilege, not a right. When I was growing up, my mom had a somewhat tight control over the budget (something not surprising in old-school/traditional Chinese women). As a result, my family seldom, if ever, went out to eat. Sure, once in a while, some takeout but that was the closest we would get. In my case, if I wanted something Panamanian, I had to sneak it – though I will admit my mother knew I did that once in a while. Of course, the fact my mother could cook very well helped a lot. Anyway, restaurants are just that, a business, and, just like anything business, you can choose to buy their goods (or look next door for better prices). The key here is that you have the option NOT to go if you feel eating out will hit your wallet/pocket hard. Heck, you can use that money you are not spending eating out in cooking lessons. As they say, teach a man (or woman) how to fish… – or cook in this case. (Side-note, although it seems I eat out a lot, I also cook at home a lot).

3) If people still choose to go to restaurants, people will leave less tips to “compensante” for the increase in the tax. I will mention this is one of the most ridiculous reasons listed. The tip topic is such an issue to me to the point I have written a complete blog post about tips in the past – check it here. It is a good read (if I can say so myself!) but, if you want to skip it, one of my issues is the fact waiters and waitresses believe they are entitled to it. To summarize that part, no, you are NOT entitled to it. And, if you think you are, I hope you fill up all your forms with the CRA to account for those tips…

4) Lost jobs. I have the odd belief a lot of restaurants are overstaffed. Yes, you know who YOU are! But, for argument sake, let’s say they were running a tight ship. If that is the case, just like pretty much any job, you have to adjust yourself to the market. If the restaurant has to layoff people because there are less people eating out, so be it. Don’t sulk or sit on your hands. Instead, look for alternatives until it picks backup. Or switch careers. Or, to badly paraphrase Ryan Bingham (Up in the Air, played by George Clooney – Thanks, Mijune!), think of it as a new opportunity.

There are more arguments but, for the most part, I think I can present similar counter-arguments. It is a single industry that has raised its points, yet I don’t see other industries raise similar thoughts. Heck, why not even look at a larger picture. For example, check this article from The Globe and Mail.

With the caveat that I am a “typical Canadian”, i.e., indiferent towards any political party, in a way, I applaud the current local government for having the (meat)balls to take such decisions, if there is a firm belief it is for a greater good further down the road. Of course, I might be mistaken as well but, so far, from the arguments shown to me, that does not seem to be the case. (On an unrelated note, I used to work as an auditor and, currently, as data analyst. I also have some statistics background and I am always dubious of numbers provided. As it is said, there are lies, damn lies and then there are statistics).

To close this post down (from my perspective, of course; I hope to hear/read from you), this brings the question of how will this blog be affected. For the most part, I don’t think it will be affected much. At first, I might be cautious of where I eat and what I eat. Or simply suck it up. But, after a while, I will just overlook that and it will be business as usual.

Tagged under: Random