Norm Macdonald MLA                                         Columbia River – Revelstoke

MEDIA RELEASE

For immediate release

August 21, 2009

New Harmonized Sales Tax will hit tourism industry hardest

VICTORIA - The tourism industry is being dealt a double blow by the implementation of the BC Liberal Harmonized Sales Tax (HST) and some local tourism operators are concerned they will not be able to survive, says Columbia River – Revelstoke MLA Norm Macdonald.

HST, which will combine the federal goods and services tax (GST) and the provincial sales tax (PST), will be applied to goods and services that were previously PST exempt.  Current PST exemptions within the tourism industry will disappear with harmonization significantly raising the cost to consumers.

“Local adventure tourism operators are telling me that this added cost will seriously affect their businesses,” said Macdonald.  “And in the case of businesses with fixed-priced contracts in place for after July 1, 2010, the extra cost of the tax cannot be passed on to the consumer.”

The Council of BC Tourism Associations is saying that the impacts of the HST could be catastrophic on many sectors and ruinous to individual businesses.

Restaurants owners are also expected to suffer as a result of the additional tax.

A poll done by the Canadian Restaurant and Food Services Association conducted shortly after the tax was introduced said that two-thirds of restaurants questioned planned staff cutbacks and six per cent said they would shut down due to the tax.

But reduced business and increased costs are not the only consequences to tourism resulting from this tax.  The harmonization of the GST and PST will result in the elimination of the Hotel Room Tax.

Revenue from the Hotel Room Tax finances, in part, the award-winning Crown Corporation Tourism BC which is now being shut down.  Tourism BC was established in 1997 to promote development and growth in BC’s tourism industry and was considered an important player in ensuring that BC meets its goal of doubling tourism revenues to $19.6 billion by 2015.

Hotel room tax also funds destination marketing organizations and other provincial supports for resort communities.

“The tourism industry is a very big part of the communities I represent.  We have come to depend on growth of tourism and hospitality for our economic well-being and the implementation of HST could be devastating,” said Macdonald.

“For tourism operators in my communities the BC Liberal HST just does not make sense.”