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Opus Salon's Ludovic Jan, with wife Jessica at the Vancouver shop on Friday, Feb. 24, says times are tough for small businesses, and the BC Liberals' decision not to eliminate the small-business tax is 'an extra knife in our back.' (Jeff Vinnick for the Globe and Mail/Jeff Vinnick for The Globe and Mail)
Opus Salon's Ludovic Jan, with wife Jessica at the Vancouver shop on Friday, Feb. 24, says times are tough for small businesses, and the BC Liberals' decision not to eliminate the small-business tax is 'an extra knife in our back.' (Jeff Vinnick for the Globe and Mail/Jeff Vinnick for The Globe and Mail)

B.C. tax backtrack puts pinch on small business Add to ...



Shooting down growth

Afton Holmes attributes success in her business to adrenaline.

She is operations manager for PaintballGear.ca, which supplies guns, masks and other gear for the sport of paintball.

Business is good, she said, because of public affection for the sport that is sustained by the guarantee of an “adrenaline rush” for its participants.

“You’re hunting people and you’re being hunted. Even though you get shot, you get, maybe a bruise, maybe nothing at all,” she said from her Coquitlam office. “You walk away fine.”

But she said her nine-year-old business, which has 12 employees, isn’t walking away well from the small-business tax decision.

“Right now, we are watching every dollar that we spend,” she said. “Anywhere I see that we can shave 50 cents, I do it.”

It hurts to have a 2.5-per-cent tax because profit margin leeways are 10 to 15 per cent. “[It]doesn’t seem like a lot of money, but, for us, it is,” she said.

“[It]will impact our growth, which is going to impact our ability to hire new people and give our existing employees pay increases and also impact our physical growth as a company – purchasing power, purchasing more inventory, which is going to supply our customers better, which is going to keep them happy.”

Less to reinvest

“I thought the guy is not very smart.”

That’s the caustic conclusion of Henry King, owner of Art Knapp’s Plantland Flowers Shop in Penticton, to Mr. Falcon’s decision against cutting the small-business corporate tax rate.

“He’s saying, ‘I have nothing for the teachers. I have nothing for this. I have nothing for that. Guess what, we’re not going to drop a small-business rate either because we all have to share in the pain,’ “ Mr. King said.

“We all have to share in the pain but don’t make a political decision, make a smart decision – leave more money in the hands of business.”

Mr. King bought his operation in 1981. He said business has been picking up lately as consumers realize the economic downturn may not be as bad as they thought.

Mr. King said the business is all about personal connections with consumers, pursued through appearances on local radio, newspaper articles and a website. In a market like Penticton, which is much smaller than Vancouver, it’s easier to make connections.

“We have that unique opportunity, which makes my job very satisfying, in having a relationship with the customer, knowing their wants, knowing their needs, knowing their families, seeing their kids raised, doing the flowers for their weddings, all those sorts of things that you can strike a relationship,” Mr. King said.

Mr. Falcon’s decision, Mr. King said, is an obstacle. It will take away money he could better use in building his business of 18 to 20 employees. He declined to be specific about Art Knapp’s financials, but noted the scenario “won’t create a cash-flow crisis.”

Still, it’s grating.

“The more money you take away from me as a minister of finance, the less I have left to reinvest and create jobs,” he said.

“All I can try and do is try and work leaner and smarter and harder because, at the end of the day, I want money left over to reinvest.”

Business as usual, but PST hurts

Lawrence Adler, of International Marine Floatation Systems, just can’t see past the demise of the HST.

For that reason, he freely admits to a clouded view on the issue of the small-business corporate tax.

“Zero would better than 2.5 [per cent]” said Mr. Adler, controller for his Delta, B.C.-based company, which produces concrete floating structures such as docks, floats, and boat sheds for marine use.

“But we’re functioning under what we’re functioning now and so it’s just business as usual, whereas the shift from the PST to HST was a dramatic positive step for the way business can function,” said Mr. Adler, who ironically was working on HST paperwork while being interviewed.

He described the PST as antique legislation with “abstract concepts in its guts” compared to the efficient, clearer, simpler HST that’s been especially easy to work with.

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