An Important Canadian Retailer is expecting $5 Million Hit from HST in H2 2010
Reuters is reporting that Canadian Tire is expecting a poor 2010, due in part to Ontario's and British Columbia's decision to harmonize the retail sales tax (ON)/social services tax (BC) with the goods and services tax (GST). Reuters reports that "Canadian Tire ... sees some additional headwinds in 2010 which could bite into its results, including a C$5 million hit from the upcoming harmonization of federal and provincial sales taxes in Ontario and British Columbia..."
This is not a good sign for the Ontario and British Columbia economies and brings into question why is harmonization occurring during weak economic conditions.
If a major retailer, such as Canadian Tire, is predicting weaker retail sales caused by harmonized sales tax (HST), what is going to happen to the smaller retail stores? What is going to happen to the high end stores? What is going to happen to luxury purchases? What is going to happen to automobile sales?
What is also important to recognize is that most (if not all) retail sales of goods to consumers are already subject to Ontario retail sales tax/British Columbia social services tax and GST. The current tax rate and the HST tax rate are the same for most retail goods. Therefore, Canadian Tire must be concerned about consumer backlash, consumer spending habits, the perception in the marketplace concerning HST.
