HST will cut into shifts and tips
More tax and less income means fundamental life changes for many
By Andrew A. Duffy, Times Colonist June 23, 2010 Lacey Geary was prepared to have her social life and entertainment budget take a bit of a hit when the harmonized sales tax comes into effect, but the 22-year-old server is starting to realize she'll be affected by the tax on the other side of the ledger, too.
Like thousands of servers, bartenders and restaurateurs, she faces the prospect of lower tips and fewer shifts as the HST comes into effect July 1.
The tax, which combines the five-per-cent goods and services tax with the seven-percent provincial sales tax, could mean fewer people eating out less often, according to restaurant industry experts.
"I get hit on both sides, and that's going to be tough," said Geary, who recently started work at Brown's Social House after a couple of years bartending and serving at Barkley's.
The B.C. Restaurant and Foodservices Association has estimated restaurants could lose as much as $750 million a year in B.C. because of the new tax.
Previously meals at restaurants were not subject to the PST.
"Serving is a tough job to get through in the first place as you are relying on people's generosity," she said. Extra tax on a bill is likely to have an impact on tips left behind.
Geary, who makes about $22,000 a year, said lower tips will be especially hard on servers who work at restaurants where food bills tend to be lower.
"If servers see customers starting to become a little more stingy, they are going to have to go elsewhere to find work or try and work at high-end restaurants where they charge more for food," she said.
According to figures provided to the Times Colonist by Statistics Canada, someone like Geary could expect to spend between an extra $99 and $173 each year because of the new tax.
Geary said the double whammy -- more tax and potentially less income-- could mean a fundamental change in her life.
"I'm going to have to watch my spending closely, cut back on going out for dinner, drinks and coffee for a start," she said.
Our HST special series continues daily in Money
That's a common reaction. Jeff McKay, 30, an executive with the Oak Bay Marine Group, said he will also watch where his money goes and cut back, and not just because of extra costs.
According to the Statistics Canada numbers, McKay faces spending between $332 and $359 extra each year under the HST.
"Hopefully, my job is not affected. That is an area of concern while working in the tourism industry as lots of positions in the industry have just folded," he said.
The Council of Tour ism Associations has estimated the tax could cost the industry as many as 5,174 jobs and see visitor spending drop by as much as $545 million annually.
McKay's spending will drop as well.
He eats out several times a week -- lunch on work days, dinner three to five nights a week and breakfast on the weekends -- and spends about $30 a week on laundry and dry-cleaning.
Costs will also rise for his gym membership, haircuts, boat moorage and airline flights.
"I realize the need for taxation in the province but this is ill-timed with the downturn in the economy," he said.
Caitlin Flanders, 24, is saving as much as she can this month before the HST comes into effect and stocking up on items such as over-the-counter drugs and vitamins, which will be subject to HST after July 1.
Flanders said despite the fact she makes a good wage, she will have to start watching her spending more closely. Statistics Canada figures show the impact on her bottom line could be between $173 and $253 each year.
"It means I will be able to go out less, fewer dinners out, coffees and things like that -- maybe it will save me money," she said. "But until recently, I didn't realize taking a cab or parking would go up and that will affect what I will do."
She also is heading back to school this year and she will be forced to live on a much tighter budget.
"This can't be good, we live in the most expensive province already and it's getting harder and harder to live here. I think it will cost me $500 to $600 a year easily."
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