Tax costs a pretty penny

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Salon owner Kristina Poturica says even accountants are confused by the way the provincial government has rolled out the extension of the PST on grooming services. (COLE BREILAND / WINNIPEG FREE PRESS) Photo Store

What will be taxed

Personal services subject to the province's seven per cent retail sales tax as of Sunday:

-- Aromatherapy

-- Foot detox

-- Vichy shower

-- Tattoos, including henna tattoos

-- Body piercing

-- Airbrush tanning and spray-on tanning services

 

Non-medical skin care and esthetician services, including:

-- Nail services: manicure, pedicure, buffing

-- Facials

-- Laser skin treatments for age spots, spider veins, acne

-- Makeup services, including: makeup application, permanent cosmetic services

-- Skin exfoliation, body polishes, microdermabrasion, scrubs, wraps and peels

-- Hair-removal services, including:

electrolysis, laser removal, pulsed light, sugaring, threading, waxing;

-- Shaving services

 

What will be exempt:

-- Medical and reconstructive treatments provided by a medical doctor, nurse, or dentist. (Not including hair augmentation or removal services).

-- Cosmetic-injection procedures administered by a nurse or medical doctor. Cosmetic injectables (such as botox, juvederm and restylane) are also exempt when purchased for use by a nurse or medical doctor.

-- Massage therapy, physiotherapy, reflexology and chiropractic treatments

That new tattoo will cost more as of Sunday.

So will any haircut or styling that costs more than $50, any facial, pedicure and manicure, or if you're so inclined, any scarification or body branding.

These and a whole raft of other personal services, from mud baths, scalp treatments and non-dental teeth whitening, will be subject to the provincial seven per cent retail sales tax as of Sunday.

The measures were revealed in the Selinger government's April budget and will affect just about every Manitoban who makes an appointment with a hairstylist, spa, tattoo parlour or nail salon.

One of the few personal services exempt from the PST is children's face-painting, a recent government tax bulletin said.

The province has said it needs to extend the PST to these services to raise more revenue to beat down its budget deficit. The NDP has said it wants to pay off the deficit, forecast to be $460 million this fiscal year, by 2014.

Extending the PST to these services will raise more than $106.5 million annually.

But critics say the measure is poorly conceived and will force hundreds of small businesses to scramble to get their accounting processes in place so they can properly remit the sales tax they collect to the province.

Business owners complain they were never consulted on the changes and resulting extra costs to them, which they say will be borne by consumers.

"The unfortunate part is that how the new tax will be handled hasn't been explained," said hairstylist John Unger of John's Hair Designs on Sargent Avenue. "It's been poorly thought out."

Unger said the new tax regime has no definition for a haircut and he called that a glaring loophole.

"What we could literally do is cut one single hair, which constitutes a haircut, and either give it away for nothing or charge one cent for it and it makes a cut and colour non-taxable."

Without more specific rules in the new tax regime, some small businesses will start finding ways around it to spare themselves bookkeeping headaches and to save customers money.

"It's a tax that's going to hit the middle- and higher-priced salons and/or their clients a lot more heavily than it will be their neighbourhood salon that has pretty low prices to start out with," Unger said. "They might be able to provide a lot of their services tax-free, which sort of gives them a bit of a benefit."

The Opposition Conservatives say extending the PST -- which hit many insurance products July 15 -- is Premier Greg Selinger's way of slipping in a tax hike.

"Greg Selinger gave Manitobans his word prior to (last fall's) election that he wouldn't raise taxes when he needed their vote and now Manitobans are paying the price for that broken promise," Brandon Tory MLA Reg Helwer said. "We're seeing the highest tax increase in over 25 years."

But not all Manitobans will feel that new tax bite, some say.

They say that because most customers for hair and esthetician services are women, the vast majority of men will escape the tax by getting a haircut that costs less than $50.

"The average client walking in my door, 90 per cent of them are female," Rituals In Hair and Skin owner Kristina Poturica said.

"They're not going to be happy by paying seven per cent extra on everything they choose."

Poturica and other salon owners say the new tax adds a double whammy to their businesses as the minimum wage is set to rise by 25 cents an hour on Oct. 1 to $10.25.

They want the province to delay implementation of the tax to July 15, but the province has nixed that idea.

Poturica and Tiber River Naturals co-owner Michelle Lalonde also said the new tax regime is so confusing some accountants do not fully understand it. Plus, some have to produce new gift certificates to reflect the new tax, an added cost on top of putting new bookkeeping systems in place so they can accurately collect and remit the tax to the province.

"I do feel that they've put me in a really poor position," Poturica said.

"It's going to be challenging."

bruce.owen@freepress.mb.ca

What will be taxed

Personal services subject to the province's seven per cent retail sales tax as of Sunday:

-- Aromatherapy

-- Foot detox

-- Vichy shower

-- Tattoos, including henna tattoos

-- Body piercing

-- Airbrush tanning and spray-on tanning services

Non-medical skin care and esthetician services, including:

-- Nail services: manicure, pedicure, buffing

-- Facials

-- Laser skin treatments for age spots, spider veins, acne

-- Makeup services, including: makeup application, permanent cosmetic services

-- Skin exfoliation, body polishes, microdermabrasion, scrubs, wraps and peels

-- Hair-removal services, including:

electrolysis, laser removal, pulsed light, sugaring, threading, waxing;

-- Shaving services

What will be exempt:

-- Medical and reconstructive treatments provided by a medical doctor, nurse, or dentist. (Not including hair augmentation or removal services).

-- Cosmetic-injection procedures administered by a nurse or medical doctor. Cosmetic injectables (such as botox, juvederm and restylane) are also exempt when purchased for use by a nurse or medical doctor.

-- Massage therapy, physiotherapy, reflexology and chiropractic treatments

Republished from the Winnipeg Free Press print edition July 1, 2012 A3