Auto retailers worried HST increase could hurt business

Darrell Cole
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AMHERST - Cumberland County's auto retailers are asking Finance Minister Graham Steele to reconsider any plans to increase the HST in Nova Scotia to help fight the province's spiralling deficit.

In an open letter to the minister, included in a full-page advertisement in Monday's edition of the Amherst Daily News, the seven auto retailers tell the minister an increase to the HST would be a disastrous move on the part of government.
"We are in an extremely vulnerable position due to our geographic location on the Nova Scotia-New Brunswick border," association president Don Furlong said in the ad. "This proposed rate increase will take away retail sales from all our stores as Wesmorland County is included in our area of responsibility for our national franchise partners."
Furlong said retailers are concerned the tax increase would be "one more nail in the retailers' coffins that we are not open for business with our neighbours."
On Monday, Jim Hatheway of Jim Hatheway Ford Sales Ltd., said as much as 40 per cent of his company's business comes from the New Brunswick side of the border and many other dealerships have similar numbers.
Under the tax structure, purchasers pay the HST in the province of purchase unless the vehicle is delivered elsewhere. If someone from New Brunswick buys a vehicle from a Cumberland County car dealer who delivers it to New Brunswick, the purchaser will pay the New Brunswick tax.
"That's going to add to our bottom line having to deliver vehicles to New Brunswick, but it goes much deeper than that," said Hatheway. "People will have to pay the Nova Scotia tax on all their service and purchases at the dealership."
While there might not be any advantage to someone from Nova Scotia purchasing a vehicle in New Brunswick, the perceived advantage could lead some from this side of the border to the other side.
Complicating matters is the fact areas of Westmorland County from Cape Tormentine, to Port Elgin, Dorchester and Sackville, are part of the local dealers coverage area.
Steele, in Amherst last night for the Back to Balance consultations, said the auto retailers raise a good point and it's something his department needs to think about if it raises the HST.
"It's an aspect I never thought of, the fact there may be franchise owners covering both Cumberland and Westmorland counties," Steele said.
"If we were going to raise the HST, we would definitely have to look at this. I'm not interested in hurting business and of all the places in Nova Scotia that have legitimate issues that need to be addressed, Cumberland County would be at the top of the list."
Angus Furlong of Scotia Hyundai is concerned with how the tax increase could hinder business in general.
"We have customers that come to Amherst to shop and they're not going to pay more tax here than they do there," he said. "They'll stay in New Brunswick and we'll all lose that business."
Furlong said a lot of people from areas such as Shediac and Cap-Pele prefer to come to Amherst because they prefer shopping in a small town as opposed to battling traffic in Moncton. But to save two per cent they would probably stop coming to Amherst.
At the same time, people in Cumberland County would likely begin crossing the border in greater numbers. Angus Furlong is not sure how this would play out in his numbers, but he can't see it helping.

Organizations: Amherst Daily News, Jim Hatheway Ford Sales

Geographic location: AMHERST, Cumberland County, Nova Scotia New Brunswick Nova Scotia-New Brunswick Wesmorland Westmorland County Cape Tormentine Port Elgin Shediac Moncton

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Recent comments

  • lb
    February 24, 2010 - 23:46

    easy fix ... just refuse to pay it ... the shopping list for newbrunswick just got a little bigger ..

  • Scott
    February 24, 2010 - 23:45

    Someone can correct me if I am wrong, but, if you live in N.S. and you go to N.B. to buy a car, do you not just pay the GST portion of the HST in N.B. and when you register the car at RMV then you pay the provincial portion of the HST here? So if this is true, anyone that goes to N.B. to buy a car because of the increase of 2% on the HST(which is currently 8% provincial + 5% GST, soon to be 10% provincial) then you would not be saving anything. The GST portion goes to the Fed's, and the Provincial portion stays in the province the vehicle is owned.

  • WTH?
    February 24, 2010 - 23:45

    Well, of course it's going to hurt their businesses and every other business in our region.

    We're not talking two extra cents on a bag of chips. Everything Nova Scotians buy in this province will have an extra 2 per cent added on -- that can add up to thousands of dollars extra per household every year!

    I say this government needs to look at its own spending before it comes running to the people looking for yet another handout!

    These guys are like the 35-year-old kid still living at home, spending his own money like a drunken sailor while Mommy and Daddy cover all his bills!

  • Switters
    February 24, 2010 - 23:45

    Now this is a story Darrell. This is big bucks and jobs leaving Cumberlnd in the event of a tax increase. Too bad these dealerships had to pay for an ad in your paper for you to notice.

    If you weren't so busy chasing cancer sticks.......

  • watch you spending
    February 24, 2010 - 23:45

    I agree, the gov at all levels should be watching every penny they spend and ask themselves one simple question. Would the tax payers approve of this or not? Every decision they make, from the office equipment they purchase to the amout they get reimbursed for their travel should be considered. There are plenty of ways to save a little here and there that add up! Some people get a little greedy and selfish at times.

  • Greg
    February 24, 2010 - 23:45

    Well said, guys! This is a perfect example of how a potential HST increase, intended to increase provincial tax revenue could actually have the reverse effect! If the tax hike is intended to bring in an extra 2 percent, and results in a loss of the 13 percent that would have otherwise been received, are we accomplishing anything positive? Vehicles, being big ticket items, are going to show the greatest cost differential. Shoppers, given the choice, will save hundreds to thousands by shopping where the tax is lower, taking that tax out of the NS revenue stream as well as the profit on those sales out of the local economy.

  • Constituent
    February 24, 2010 - 23:45

    Take it all

  • HB
    February 24, 2010 - 23:45

    @Scott - I believe you are correct for used cars not bought from a dealer (and possibly from a dealer too, unsure about that) but when it comes to new cars it just depends on where you take delivery. That means for NB customers of Amherst dealerships, they have to get their car literally delivered to their home address.

    Here's the problem for Amherst and other residents as I read it - we don't have NB addresses. Therefore, to save the 2% tax (which is about 1 whole car payment), we have to buy from and take delivery at a New Brunswick dealer. We can't buy from our home town (unless you want to pay the extra tax). Somebody please correct me if I'm wrong on this, but it looks like that's the case.

    Little wonder car dealers took out a full page ad yesterday. If this increase goes through, Amherst dealers might as well pack up and move to Sackville. Greg's right, the 2% they will gain will mean 10% lost to New Brunswick.