Retailers object to adding a third tax in point-of-sale terminals.

Retailers demand province abandon separate transit tax

Government mulling referendum change after business complaint of 'red tape' from expensive semantics of a third sales tax

The Retail Council of Canada is vowing to oppose the Metro Vancouver transit referendum unless the provincial government agrees to simply add the proposed 0.5 per cent sales tax to the existing PST instead of creating a new tax.

Metro Vancouver mayors on Dec. 11 proposed a simple 0.5 per cent increase to the PST but the province instead announced a week later that the ballot would ask voters to approve a separate 0.5 per cent sales tax dubbed the “Congestion Improvement Tax” that would apply to “the majority” of the same purchases.

It’s been unclear since then what, if any exemptions, might be different.

Retail Council of Canada spokesman Greg Wilson said the province must make the referendum a vote on a “hard and fast” PST increase instead of a “precedent-setting” third sales tax that would add an extra line to receipts and force stores to spend thousands of dollars in unnecessary costs re-coding point-of-sale terminals.

“Pretty well everybody is alarmed,” Wilson said of the council’s member businesses. “We’d like the government to abandon the idea that it be a separate tax. We want it to be the same.”

RELATED:Extra half point transit sales tax would apply on alcohol, used cars: province

Simply declaring the PST to be 7.5 per cent within Metro Vancouver instead of seven per cent would be more transparent for consumers than the current proposal, he said, adding anything else is unacceptable.

“For a government that wears this badge of honour about cutting the red tape burden, we don’t see that in this proposal. It’s a dramatic increase in red tape.”

A finance ministry spokesman indicated the province is considering a reversal.

“The retailers’ suggestion of a single tax line of 7.5 per cent is under consideration as work continues to design the best way to collect revenues required to fulfill the mayors’ plan for congestion improvements,” he said in an emailed statement Wednesday.

Transportation Minister Todd Stone previously argued the Congestion Improvement Tax name makes it clearer to Metro voters that the new tax will go towards a $7.5-billion suite of transportation upgrades, including more bus service, light rail lines in Surrey and a subway in Vancouver along Broadway.

But business groups like the retail council see it as expensive semantics.

The rationale has also weakened as finance ministry officials increasingly hint there will be virtually no difference in how the new tax would be applied from the PST.

“The tax is intended to match the PST as closely as possible – as long as it’s administratively feasible,” the latest ministry statement said.

Wilson sees little reason for the government to cling to the name change and not call the tax what it is – a PST hike – except a political one.

“I expect they want to be able to point the blame at the mayors and the voters themselves and be able to say ‘Oh, it wasn’t our fault. We didn’t do this.'”

He said many retailers want to support the Yes campaign and the council would at least stay neutral and possibly join the Yes side if the province shifts gears.

“We think the transportation infrastructure is good for regional economic development,” Wilson said. “It brings our goods, our customers and our employees to our stores. We certainly wouldn’t be running to join the No side.

“But if it’s a distinct tax we would be opposed.”

There’s no sign of when the province will clear up the confusion around the proposed tax, despite repeated requests from Black Press.

A finance ministry spokesman earlier this month called the referendum proposal conceptual and suggested voters and the media focus on the broad strokes of the proposal rather than fine details of tax application.

“At this point, the mayors are simply at the stage of asking their citizens about the proposed tax as a concept,” Wednesday’s government statement said. “Additional work to clarify the design of the tax and implementation is ongoing, and we will need to work with the mayors’ council on many implementation questions.”

Blair Qualey, the CEO of the New Car Dealers Association of B.C., said dealers remain “very concerned” about the lack of clarity on whether car buyers will be able to drive outside of Metro Vancouver and purchase a new car to save the 0.5 per cent.

“It’s tough to ask people to vote on something when they don’t have all the details,” he said.

Qualey said he doesn’t believe there will be any more answers from Victoria before the mail-in referendum – the ballots go out March 15 and are due back no later than May 29.

“The impression we’ve been given is there won’t be any discussion about implementation until after the vote,” Qualey said. “They’re going to let the vote happen and worry about how it gets implemented after.”

A $30,000 new vehicle would be subject to $150 in the additional tax for transit and transportation.

Rather than risk “leakage” of business out to the Fraser Valley, many car dealers in Metro would likely be forced to absorb the tax, Qualey said, but added that’s a significant hit to businesses that already pay a lot in tax.

“Eating that half point is a huge amount of money for what are small businesses.”