Turning inner space into outer space

December 30, 2010

HST a tough nut to crack

On today’s front page, we have two seemingly opposing views on the HST. MLA Terry Lake says reports of big spending over the holiday season prove the tax is not hurting the economy. Meanwhile, a restaurant owner says the HST contributed to the closure of her business.

So who do we believe? Well, both — and neither. Lake, as expected, will support policy introduced by his government, but he does make some valid points even when you look beyond the political spin. For better or worse, Kamloops shoppers have obviously found a way to adjust to the HST.

But how do we explain the closure of the Comfy Couch restaurant? The owner insists the HST, along with the economic downturn, kept customers away. She’s backed by the head of B.C.’s restaurant association, who predicts the closure of more eateries.

The way I see it, people will continue to spend on things they consider to be necessary and if they can find bargains. The advantage retailers have around Christmas is that for many people, the giving of gifts is almost mandatory. Who can tell their kids that Santa is not coming this year? Also, retailers can offer sales and discounts to lure shoppers into their stores, where they will at least be exposed to the option of buying.

Restaurants, on the other hand, are a luxury no matter how you look at it. Christmas dinner can just as easily be prepared and served at home. And it’s rare for a restaurant to be able to offer meal deals strong enough to convince diners to do otherwise.

I tend to believe the many economists who insist that in the long run the HST will be good for B.C. But there’s going to be a transition period, and the big question is whether we have the fortitude to see it through.