Golf industry clubs HST

Hey there, time traveller!
This article was published 09/09/2009 (6178 days ago), so information in it may no longer be current.

Dig deep, Manitoba golfers, if your provincial NDP government decides that it’s best you have a harmonized sales tax.

It’ll be a revenue windfall and harmony for them indeed, bringing all kinds of items previously not assessed a provincial sales tax under a new blended tax that includes the GST.

You? You’ll almost certainly pay more — probably the full seven per cent addition — for green fees, memberships, lessons and range balls for starters. And the hit isn’t exclusive to golf.

Most other sports and recreational activities would be hit the same way, as will things like haircuts, commissions and all kinds of fees.

It’s a done deal in Ontario and B.C. Both provinces will discontinue charging PST and GST separately and move to a harmonized tax on July 1 next year. Manitoba is still considering a federal offer to get with that program some time in the future.

There aren’t two sides to this story or any silver linings when it comes to golf, according to Jeff Calderwood, the CEO of the National Golf Course Owners Association Canada.

"When I first heard of this in Ontario, the word I used at the time was ‘suicidal,’ politically," Calderwood said in a phone interview from his Ottawa office late last week. "The timing of it couldn’t be worse. You’re in a recession and inside the golf industry, this is a very weak year on weather.

"Outside of the golf industry, it seems like very poor timing for all industries."

All of the details aren’t in yet in Ontario or B.C. on things like exempt products or services, or incentives to implement an HST.

In Manitoba, it’s still just a concept and a discussion, but it would be a lot to expect that in one of the last strongholds of bracket creep, consumers would get a fair break on the harmonization scheme.

"They give you back some short-term incentives, some for the consumer, some for business," Calderwood said. "A consumer (incentive) in Ontario, going on memory, is $1,000, but it’s giving people back their own money. People don’t get that. You get it one year and the tax is there forever.

"But they’re clever with what they call incentives and I call bribes. They bribe you with your own money and they’ll bring in a whole lot more tax revenue by doing this.

"Not only that, as a consumer your taxes have gone up on a lot of things. Their incentives help them cut through that so it might help them (sell it). Plus this is a complicated thing and people don’t really understand it."

Calderwood was asked if there’s a win anywhere in this equation for golfers or the golf industry.

"No. We’re one of the industries where it’s almost totally lose," he said.

In Manitoba, there are 18,025 jobs directly and indirectly connected to the golf industry, according to the recently released economic impact study of golf in this country.

Those jobs account for $309.6 million in household income and generate $44.4 million in property and other indirect taxes for different levels of government, as well as $76 million in income taxes from this province.

More than 282,000 Manitoba residents play golf, the study said, and the revenue generated by Manitoba golf courses alone is more than $250 million per year.

An additional seven per cent on the cost of playing, learning and practising will not go unnoticed.

"In pricing, the customer’s going to have to pay almost the entire eight per cent (Ontario’s PST rate) cost to the course operator here," Calderwood said. "And the way price elasticity works in the golf industry, price is a very sensitive issue.

"Winnipeg is extremely price-sensitive for golf. It’s a very low price point compared to the rest of the country, so it’s not easy for the course operator to expect the customer to pay seven per cent more there.

"The most likely outcome is softer demand; less golf gets played and that’s bad for the golfer. It costs more so they’ll play less, or they’ll shift their spending habits down a tier.

"It’s not right for the government to be skewing our industry’s performance through taxation."

What irks Calderwood most about the HST plan is that it’s a sleight of hand.

"Our position is that we’re not necessarily opposed to a harmonized sales tax," he said. "The details aren’t all in. It’s an efficiency that two taxes collected together and administered as one should save overhead somewhere inside the system.

"But it’s when you change the rules of what you’re applying the tax to, when everyone gets upset. You could have a system of one harmonized tax… where the second half of the tax didn’t apply to the same things (as before). Then you’d have nothing but administrative efficiency created and you haven’t added tax.

"But what it appears they’re doing under the guise of efficiency and harmonizing taxes and for all the reasons they’ll state, is a sneaky thing by broadening it to all the rest of the industries, customers get stuck paying or businesses get stuck lowering their margins to keep from scaring customers away.

"In my opinion, they didn’t have to do it this way."

tim.campbell@freepress.mb.ca

 

Simply more pricey

 

UNLESS some specific exemptions surface — and there’s been not a whisper of any — here’s what these golf items might cost today and would cost under a 12 per cent HST in Manitoba.

 

A $2,000 membership: $2,100 (with current GST) / $2,240 (with proposed HST)

A $5,000 initiation: $5,250 / $5,350

A $40 green fee: $42 / $44.80

A $60 lesson: $63 / $67.20

A $50 club repair: $52.50 / $56

A $10 bucket of range balls: $10.50 / $11.20

A $25 club rental: $26.25 / $28

A Manitoba Junior entry fee of $120: $126 / $134.40