Vancouver, BC – With less than a week to go before the harmonized sales tax (HST) becomes effective in British Columbia, Ipsos Reid’s Pre-HST Study reveals that the vast majority of adult British Columbians continue to strongly oppose the new tax (78% oppose, with 65% strongly oppose and 13% somewhat oppose), and will dramatically alter their purchasing behavior as a result of the HST.
Currently, residents feel that the HST will have a negative impact on them personally (80% agree), for British Columbians overall (85%), but less of a negative impact on small (62%) and large (40%) retailers in the province. Residents also believe the HST will have a negative impact on the overall BC economy (55% agree), and put some small business owners out of business (59% agree).
Residents of British Columbia have a poor understanding of the HST, and blame government and the media for poorly communicating the effect of the tax to the consumer. Of a list of 10 exempt items, very few residents (6-35%) were able to correctly identify them. For example, only one-third correctly identified the exemption for basic groceries (35%), about the same number are aware that residential rent (32%), children’s items such as clothing, footwear and diapers (31%) and prescription drugs (25%) will be exempt from HST. At the bottom end, only 17% are aware of child care service exemptions, 8% for legal aid as well as books, and only 6% for music lessons. Residents are divided on whether they have a good understanding of the benefits of the HST (62% agree, 35% disagree), but feel they have a good understanding of the drawbacks (75%). Only 6% agree they feel the government has done a good job communicating about the HST (6%), and 54% feel the media has not done a good job either.
A significant majority of British Columbians claim they will be spending less on the goods and services that will be subject to the HST but have previously been taxed at a lower rate. In fact, in 18 of 23 categories covered, the percentage of consumers who say they will spend less exceeds the number who will not change their spending level. Seven-in-ten British Columbians who dine out (70%) say they will reduce their spending on restaurant meals when the HST becomes effective. Six-in-ten consumers of snack foods will also be reducing their spending (63%). Coincidentally, six in ten residents who buy tickets to professional sporting events, live theatre and music concerts will also reduce their spending in these areas (61%). The only areas consumers will not cut back in are vitamins, over-the-counter medications, utility bills, and haircuts.
Other cost-saving measures are ready to be implemented by consumers as a backlash to the HST. The majority of British Columbians (85%) are likely to more often or more actively look for sales as a result of the HST (55% very likely, 30% somewhat likely). Most are also likely to buy less overall or reuse what they already have (83%, with 43% very likely and 40% somewhat likely), and use more coupons (73%), and buy more generic brands (68%).
Also starting July 1, 2010, Washington State will apply its non-resident sales tax exemption to British Columbians. Under this policy, BC residents will not have to pay sales tax in Washington State for goods used outside the state. Approximately half of British Columbians (54%) are likely to shop in Washington State as a result of this exemption (31% a lot more likely and 23% a little more likely).