Winnipeg Free Press - PRINT EDITION

PST hike 'lightning rod' for ire

Anger largely political rather than fiscal

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Lynda Wilson at Faveri's has been surprised by the number of customers complaining about the PST hike.

MIKE DEAL / WINNIPEG FREE PRESS Enlarge Image

Lynda Wilson at Faveri's has been surprised by the number of customers complaining about the PST hike. Photo Store

Sum up the resentment against the PST tax increase that took effect July 1 and it's less about taxes and more about politics.

Ask most business owners and they'll say it's no big deal to adjust their computer software to eight per cent from seven per cent at the till or to their accounting programs at tax time.

For customers, the grumbling isn't just about that extra nickel on a $5 burger or even the substantial tax hit on a purchase of a high-end item.

The one per cent hike in PST is about more than raising revenue, even though the increase to eight per cent will raise $277.6 million per year in extra revenues, and that's on top of a $184-million increase in taxes and fees in last year's budget.

Small business owners, from manufacturers and construction companies to retailers and service providers, say the feelings of resentment go way beyond the normal angst associated with new taxes.

At Faveri's Unpainted Furniture, at Hunter Wire and at Sundial Building Performance -- businesses that have nothing in common with each other-- only Sundial is looking at a direct hit.

But all three say the tax hike is crystallizing a sense of voter fatigue and rising mistrust of the NDP's record of spending, not to mention a broken promise to put such a hike to a public referendum first.

"Everyone has to pay PST at some point in the day and it's a constant reminder to everyone that things don't seem to be getting much better," said Faveri's owner Robert Kreis. "The PST is a lightning rod."

Kreis and his wife, Lynda Wilson, also run a carpet-cleaning and upholstery business where a lot of jobs are PST-exempt. Even there, people have been vocal about it. "That's surprising to me," Kreis said.

Eric Bjornson, president of energy-retrofitting and construction company Sundial Building Performance, said his business is taking a direct hit.

That's because of a misfortune in timing: 70 per cent of his revenue this year is from a locked-in contract signed long before the PST hike came up.

He'll have to pay the one per cent extra on building supplies and can't pass it on.

"It's probably $4,000 to $5,000 off my bottom line," Bjornson said.

But for him and Winnipeg metal-products manufacturer Rick Koss at Hunter Wire, the real rub is the way the NDP imposed the one per cent tax hike.

"My issue with the PST is the way they're going about it. They're putting it in illegally and they obviously don't care," Koss said. The government didn't deliver on a promised referendum on tax increases, he said.

The Canadian Federation of Independent Business spent the first business day after Canada Day marshalling an arsenal of 200 presentations against the tax increase for legislative committee hearings.

Like the last sessions of hearings on Bill 20 that saw presenters condemn the NDP government for failing to live within its means, for breaking its word on raising the PST and for introducing legislation to avoid a referendum on the matter, the CFIB is expected to say the government betrayed small business.

alexandra.paul@freepress.mb.ca

Republished from the Winnipeg Free Press print edition July 3, 2013 A3

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Updated on Wednesday, July 3, 2013 at 6:49 AM CDT: replaces photo

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