Monday, February 2, 2015

0.5% Transit Tax will be merged with PST if approved: no new paperwork or costly POS upgrades for small business

Small business owners in Langley had two major concerns about the proposed 0.5% sale tax increase to fund much need transit and transportation improvements in the region, South of Fraser, and in Langley.

The first major concern was that it would cause shoppers to head to Abbotsford or to the US for goods and services. Many small business owners stopped competing with the big box retail years ago, instead focusing on providing great customer service, at accessible locations, based on local knowledge. None the less, big box retail and small businesses owners alike do not need to be concerned about the proposed 0.5% sales tax causing shoppers to go to Abbotsford or the US border.

As I posted about a few weeks ago, research shows that the 0.5% tax difference between Abbotsford and Metro Vancouver would have a statistically insignificant impact on retail sales, even in communities like Aldergrove.

Factoring in the time and transportation cost savings, people in Metro Vancouver will actually have more money in their pockets to spend a local retailers, if they vote yes.

When it comes to the US border, here is some food for thought. The Canadian dollar’s value has been rising since 2002. At the same time, cross border shopping has increased. In 2002, PST was 7.5% and GST was 7%. Sales tax rates in BC have been going down ever since. PST is now 7% while GST is now 5% today.

The last remaining concern small businesses owner in Langley had was that the new 0.5% “Metro Vancouver Congestion Improvement Tax” would require expensive point of sales system upgrades while creating a whole new accounting headache.

Yesterday afternoon, the provincial government announced that the 0.5% sales tax increase will be “as seamless and cost effective as possible for Metro Vancouver businesses and consumers. To achieve this objective, the province would enable this tax to be administered as an addition to the existing provincial sales tax (PST) within the region. For further clarification, this means that consumers would see a combined PST and MCIT totalling 7.5% at the point of sale. We would not require businesses to separately identify the MCIT on receipts or invoices. The revenues collected would be subject to independent audits and annual reviews.”

You can download the full letter. This is good news for small business owners who will only need to change the PST tax rate on their tills to 7.5%. No costly point of sales system upgrade needed, and no new paperwork.

This is consistent with the provincial government’s mandate that the proposed new funding source for transit be affordable for businesses and families.

Light rail to Langley City, rapid bus service on 200th Street, more buses throughout the rest Langley, and more money for roads, all while supporting the growth of small business. Voting “Yes” in the upcoming plebiscite really is a win, win.

No comments: