Small business concerned about impact of HST; new report highlights need for consumer and merchant wins

TORONTO , Sept. 24 /CNW/ - According to the results of a survey conducted by the Canadian Federation of Independent Business (CFIB), Ontario's small businesses are concerned about the impact of the harmonized sales tax (HST) on consumers and their bottom line. Look before you Leap!: Results of CFIB's Ontario Member Survey on the HST is based on responses from nearly 3000 business owners.

"Governments have clearly dropped the ball in their handling of this critical tax reform initiative," said CFIB's Ontario Director Satinder Chera, adding that "the decision to finalize the terms and conditions of the HST, without public consultation, has generated mixed reviews and serious concerns within Ontario's small business community."

According to CFIB's report, among the potential benefits of the HST, 35 per cent of business owners pointed to a reduction in paperwork, while 22 per cent cited the increase in input tax credits.

Other small firms, however, cite concern with the harmonized sales tax. When asked which aspects of the HST will harm their business, 75 per cent of respondents expressed concern over being required to charge higher tax rates on their firm's goods and services - a big negative for consumers. Likely a direct consequence of the threat of higher tax rates, 44 per cent anticipate subsequent growth in the underground economy.

In a letter to both levels of government, CFIB is asking that the final agreement on harmonization include the following measures:

    
    -   A reduction in the combined tax rate
    -   Retaining compensation for the tax collection efforts of merchants
        (currently firms receive a small amount for collecting Ontario's
        retail sales tax which is to be eliminated under the HST)
    -   Increasing the small business transition tax credit to match the cost
        of implementing the HST
    -   The introduction of a strong fairness code for small business
    

"As many tax reform efforts in the past have meant higher taxes in the end, small firms and consumers can be forgiven if they are looking to fully understand the benefits of the planned move to the HST," Chera added. "A win for consumers, such as a cut in the combined rate, would go a long way in building consumer and business confidence in this tax change."

To view the full report, please visit www.cfib.ca/legis/ontario/

For further information: To arrange an interview with Satinder Chera, please contact Adam Miller or Meghan Carrington at [phone]