CAMBRIDGE - The federal government's tax holiday is set to take place this Saturday with the suspension of GST and HST being added to certain products, but some local businesses think this break might cause more harm than good.
Jeff Butler owns Gamebridge Cards and Hobby Shop on King Street in Preston and he is nowhere near finished correcting the prices on all his items before the tax break this weekend.
"It's been an absolute nightmare," said Butler who is in the process of changing UPC codes on 90 per cent of his stock.
In a store that has hundreds of thousands of collector cards, board games and an endless supply of hobby paint and miniatures, the new tax holiday is wreaking havoc on their inventory and the workers who have to manually adjust prices for every product.
After hearing about the break on the radio, Butler was surprised to learn he would have to undergo a lot of work for what seemed like little savings to the Cambridge business owner.
The Harmonized Sale Tax or HST in Ontario is 13 per cent on most items. This means before the tax break a child's game that would cost $80 would accrue $10.40 worth of HST bringing the total to $90.40.
The federal government has an online tool to see how much tax would be levied on a particular item that would be normally taxed at the full HST rate in Ontario.
The federal government recently announced it would be taking tax off various products such as food items, children's toys, books, children's clothing, restaurants and video games and consoles. The break will take effect on Dec. 14 and go until Feb. 15.
"Our government can’t set prices, but we can give Canadians, and especially working Canadians, more money back in their pocket. With a tax break for all Canadians and the Working Canadians Rebate, we’re making sure you can buy the things you need and save for the things you want," said Prime Minister Justin Trudeau.
Greg Durocher, CEO of the Cambridge Chamber of Commerce, thinks this tax holiday is nothing more than a gimmick that will ultimately save Canadians little money this holiday season.
"The problem is there's going to be so much confusion for really so little benefit," said Durocher. "Someone the other day said they had gone to Costco and they spent $700 basically on groceries ... and they came out and there was $7 in HST on that $700, because most things at the grocery store aren't taxed anyway."
While things like basic groceries, female hygiene products, prescription drugs and various other items are not normally taxed, things like electronics and toys are and can add up as people shop for big-ticket items.
Durocher argues the tax break while it sounds good won't affect the average shopper in the way they think it will and this will lead to confusion for both retailers and consumers.
"It's just completely ridiculous and I don't know who came up with the idea, but it was a really dumb dumb dumb idea because it's not going to save people the amount of money that I think they intended to save them. Maybe they didn't intend to save anybody much money, they just intended to have a marketing campaign, saying, look at what we're doing for you."
Durocher likes the idea of suspending taxes rather than sending out money as the federal government plans to do this upcoming spring with a $250 cheque to anyone making less than $150,000 a year.
"I don't have a problem with the government waiving taxes on things as an incentive or as a piece of assistance, because they haven't got the money. All they're saying is we're just not going to charge you," he added.
Another issue Durocher raised with the tax holiday is the potential for returns for those who bought items before the tax break.
Butler has already encountered this situation as customers have called and asked if they return their box of cards, will they be refunded their portion of the HST. Since Butler has already paid all of the HST on his inventory when bringing it into the store, he adds they might actually be losing money.
"We're still paying the taxes on it when we bring the things in, so we're actually losing quite a bit of money, like it's gonna hurt really bad," he said.
Businesses will have the opportunity to file to the federal government to recoup some of their losses, but Butler doesn't have faith it will be a fast or easy process.
Sales at Gamebridge have also taken a hit as Durocher and Butler agree shoppers might be waiting until the tax break to hit the stores. Sales at the game store are down nearly 75 per cent, during what would normally be their busiest time of the year.
"It's December and people should be Christmas shopping, but in the last three weeks since the announcement, our sales have fallen off a cliff," said Butler.
"I understand it's getting close to Christmas, but we sort of excel when people don't know what to get their nerdy friend or their nerdy kid, they come here."
Butler still has a few hundred thousand products to fix, before Saturday, but expects he will be doing this well into the new year.
