Negative fallout from the last provincial budget continues. Remember that budget? Despite a commitment in the election to no tax increases, it hiked taxes and fees by $186 million. Despite talk of austerity, it increased spending by 3.1 per cent. And in one year, provincial debt jumped 10 per cent.
But then it got worse. Implementing the changes turned a bad budget into a disaster.
The bulk of the tax hike came from making PST payable on a range of personal services like spa treatments, manicures, pedicures, tattoos and haircuts over $50. Various insurance products became taxable too.
For those small businesses that offer these services, the government made the change without consulting them, without providing clear information about how to get into compliance or without providing a reasonable window to do so. And there was work to be done.
Small businesses had to register with the provincial government, learn the process, update cash registers and accounting systems, communicate with customers, train employees and so on.
There were other problems too.
The Canadian Federation of Independent Business (CFIB) also heard from some upset hair salon owners who couldn't even find software that would make services over $50 taxable, while those under would stay non-taxable.
It was a red-tape nightmare.
Now, more fallout.
There was a small line in the budget that the frequency of remitting sales tax to the provincial government would be reduced, allowing 17,000 businesses to file less often. It sounded like a good move -- an attempt to reduce red tape for small business owners.
But here's the rub.
Businesses have to remit monthly, quarterly or annually depending on the amount of sales tax they collect. The higher the volume, the more frequent the remittance. For small businesses with less than $3,000 to remit per period, regardless of the frequency, they receive a small commission. It's calculated as a percentage of the remittance.
It's not a lot of money, but it's a gesture to recognize the business owner's work collecting and remitting taxes on behalf of all of us.
The maximum commission is $58 per period or $696 per year for a monthly remitter.
Now the letters about the change have been sent out and some businesses are automatically being switched to a less frequent filing.
If that same business now has to remit quarterly, it would lose $464 in commissions per year. If a business with the maximum commission moved from quarterly to annually, it would lose $174 per year.
Given that many businesses don't qualify for a commission at all, filing less frequently may be beneficial.
But for those that do, this apparent red-tape victory can be a hit to their bottom line.
The good news is that if small businesses want to continue remitting more frequently and keep the commissions, they can call the provincial tax division at 204-945-5603.
They'll switch you back. Too bad they didn't make that offer in their letter to affected businesses.
Janine Carmichael is the Manitoba director with the Canadian Federation of Independent Business. She can be reached at firstname.lastname@example.org