HST is not a new tax? Ask your subscribers
It's curious, that Tony Wanless, a blogger for BC Business magazine's website, takes a poke at opponents of the HST and suggests that they're too thick to understand that it's not a new tax, but rather a simple blending of the old provincial retail tax and the goods and services tax that most people pay anyway. The reason it's curious is that, in BC (and Ontario) it IS a new tax on some goods -- 7% more in BC and 8% more in Ontario -- such as magazine subscriptions. No one knows what the eventual impact will be, but one rule of thumb is that an increase in out-of-pocket costs will inevitably result in an decrease in sales. We imagine the magazine that hosts him can ill afford such a revenue hit. (He seems to be fairly sanguine about the 7% tax increase on his consulting fees as CEO of Knowpreneur Consultants.)
Labels: HST, subscriptions, taxes
posted by D. B. Scott at
6:51 pm
6 Comments:
Consultants offering their wares to businesses aren't going to be adversely affected, since for businesses the GST/HST is a flow-through tax. No wonder he's not worried. And it would appear that some business writers for magazines may know their own field, but not know a thing about the economics of selling magazines to consumers.
As the "unknowing" writer, I think a few words are in order.
First, yes, subscribers may have to pay more, so for them it could be construed as a "new" tax. But they were paying it within the subscription rate anyway because magazine publishers previously had to pay the tax for their supplies. So the only things that are new are that the tax is no longer hidden, and the publishers can now share in the flow through system.
Publishers could reduce the hit to consumers by reducing the price equivalently. Will they? I doubt it, because most have been looking for a way to increase prices anyway.
So, I don't think this is about the economics of selling magazines, but the appearance of economics to the consumer.
And as a consultant, I personally may not be adversely affected because GST/HST is flow through, but it does mean that my rates will appear to go up for my clients. And that may have an effect.
Tony Wanless
What a consumer will know is that a magazine they previously paid $25 a year for will now cost $26.75 in BC and $27 in Ontario. Whether this perceived out-of-pocket price hike results in lower sales, who knows? I think some publishers may reduce the price of their subscriptions, not because they will now be able to claim the tax back but because they don't want to lose subscribers, access to which is what most mainstream magazines sell to advertisers.
I'm not sure about B.C. offhand, but in Ontario, the printing cost of the magazine is PST-exempt, and I believe most services that go into producing a magazine (writers, photographers, staff salaries, etc.) are also not subject to sales tax.
If I'm correct about this, then there would NOT be any significant reduction in "hidden" taxes, so this is a "new" tax. I guess publishers will pay 8% less for a few incidental items (Liquid Paper and other office supplies, for instance).
Am I correct in this?
Tony, next time you get a haircut, tell me how much you paid before and after the HST.
In BC, it's a new tax on a lot of of items that previously were not subject to it. You can't spin it.
DB
Why do you think newspapers got an HST exemption? Why di Books got an HST exemption? So why did magazines get hit with the HST?
We are all printed on paper.
We all are about enriching the mind.
We are all good for culture and literacy.
So what gives? Any inights would be appreciated. An perhaps we should take some sort of collection action?
Scott B
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