Analyst says it: HST has hurt retailing
It didn’t get much attention when it was said just after Christmas: partially because many of us were still busy with the holiday season; but I noticed it.
And also because it’s not something the pro-HST media pundits and propagandists would want to tell you about: so I will.
In an article in The Vancouver Province about weak Christmas retail sales Dec. 28, experienced Credit Suisse analyst Gary Balter was commenting on the 40 per cent drop in Searts Canada’s share value in 2011.
Sears is in a lot of trouble in the US, because of the wretched economy …but Canada’s economy is relatively strong, our debt load is a fraction of the US, our consumer confidence is higher and our political situation is much more stable.
Yet all is not well in the retail sector here… especially as viewed from through the microcosm of Sears Canada. Why?
“Canada has been very, very difficult, due to the harmonized sales tax,” said Balter.
That’s not me saying it; not Bill Vander Zalm saying it; not some NDP critic saying it. No, it’s from an economist working for the well-known and trusted international financial analysis institution, Credit Suisse.
Is Sears alone in suffering under the HST? Impossible! Imagine what a little digging by the working media could find!
The HST indeed HAS had a dampening effect, to put it mildly, on major spending by British Columbians.
Many, many restaurateurs, catering to middle class diners–not the high end specialty dining rooms frequented by corporate executives, political leaders and their highly-placed media pundit friends–have been telling us that for years. Many have closed or are struggling because adding HST onto bills, on top of PST, on top of tips, on top of even higher parking fees anywhere nearby have made going out for meals in many BC urban areas just too expensive to do as often as people used to enjoy doing.
Now retail has also been shown to be suffering, especially when it comes to gift-giving, larger purchases, major appliances and furnishings.
Of course, HST apologists will point out that some of these items will still have the GST added onto the PST when the HST is finally removed, so what’s the difference? What they fail to take into account is that the HST being applied to so many goods and services that did not have the GST applied previously, has hurt so much that purchases of all goods and services have clearly been affected.
The HST has clearly sucked too much money from the economy and put it instead into the pocket of the provincial government. And created a negative attitude among consumers that is now being widely felt.
And it is going to get worse!
Christy Clark’s inability or unwillingness to get rid of the HST in the next few months will continue to hurt everyone–except the provincial coffers–for another year or more.
In fact, the economic damage will grow even greater: because as the eventual end date is known and approaches, people will hold back on spending even more than threy do now.
Why buy a house or do a major renovation on a kitchen or entire house when waiting could save THOUSANDS in taxes?
Many construction, renovation and service industries are well aware of this: the damage to BC business, especially in the last six months of the hated tax, will be substantial…. as people wait it out.
But in Victoria, no one seems to be listening. In fact, they say even the anticipated March 2013 end date may not be met.
I see it as deliberate milking of the consumers … or just plain incompetency by the government and its bureaucrats.
The HST MUST be ended BEFORE the next Fall/Christmas shopping season.
And the governhment MUST lift the tax from the construction and service industries MUCH FASTER than that.
Or face the economic ruin to many more businesses and resulting taxpayer rage that will result if they do NOT expedite the Horrible Sales Tax’s demise.
Harvey Oberfeld is a blogger and retired broadcaster. This column originally appeared in his blog, Keeping It Real.