12 - Friday, January 25, 1991 - North Shore News THE SEVEN per cent GST is a multi-stage, value-added tax which replaces the 13.5 per cent federal sales tax (FST), or manufacturers’ tax. Until the GST hit the headlines, most consumers weren’t even aware of the existence of the FST. But it’s been there all along, buried in the prices of most manufactured goods, with the ex- ception of food, clothing, footwear and pharmaceuticals. The GST also replaces some other federal taxes, such as the 11 per cent communications tax, which shows up on your telephone bill every month, and the telecommunications programming services tax, which appears on your cable television bill. According to the government, the manufacturers’ tax favored imports over Canadian-made goods. Businesses have long com- plained it was an unevenly applied tax. The GST is much broader- based. To put it in perspective for you, . the manufacturers’ tax was paid by some 75,000 businesses in Canada. With the GST, however, 1.6 million businesses will be charging the new GST. Almost every good and service offered in the country will be affected. **The service sector represents the biggest broadening effect of the GST,” says Ron Pickerill, president of the Certified General Accountants Association of B.C. “For the first time in Canada, consumers will pay tax on hairstyling services, cab fare and season tickets to everything from hockey games to the theatre, to name a few. “If you are a business person and use services such as public relations, management consulting, portrait photography and accoun- ting, you'll also be paying the seven per cent tax.’” The implementation of the GST also means businesses will have to Roses are red. Violets are blue. An ad in the Classifieds Says. “| love you!” change the way they do business, from pricing strategies to hard- ware equipped to deal with the G Pickerill says: ‘If you’re having trouble understanding what's ex- pected of you under this new tax, see your local Certified General Accountant. CGAs have the ex- pertise to help prepare you and your business for the GST.”’ When it comes to paying GST, the user will bear the brunt of the tax. While GST will be paid at every stage of production, it will be refunded to every registrant — a person required to collect GST on behalf of Revenue Canada — except the end user. Exempt services, medical and dental care for example, will not be taxed and no refunds will be available to the suppliers of these services. Roses are red, Violets are blue, An ad in the Classifieds Says, “I love you!" “for $5. 00 SOME GOCDS will cost less; others will cost more. In theory, on goods where the effective tax rate is above seven rer cent, prices will fall. On goods which were never subject to the manu- facturers’ tax — clothing and shoes for example - prices will increase. And for the first time, Canadians will pay tax on services — so things like haircuts, travel, lawyers’ fees, restaurant meals and take-out food will cost more. Some goods and services have been declared tax exempt —- or zero- rated -- including basic groceries, residential rents and dental and health care. “‘But don’t expect huge savings,’’ says Al Kerfoot, first vice president of the Certified General Accountants Association of B.C. *‘In the case of rent, health and dental care, prices are actually ex- pected to increase. Though consumers don’t have to pay GST on these items, the supplier does not recover the GST paid to offer the Service and may raise the Price to recoup the cost.”’ But, despite price increases on services and goods which were never subject to the manufacturers’ tax, consumers are being told they will pay less tax in the long run. Ottawa is predicting that the competition for consumers’ dollars will force businesses to pass on the full savings from the elimination of the higher manufacturers’ tax. Says Kerfoot: ‘*There is no clear-cut answer to this question. Only time will reveal how the Canadian marketplace responds to the GST.”” Roses are red. Violets are blue, An ad in the Classitieds, Says, “t fove you!" “WIN A ROMANTIC NIGHT FOR 2 AT THE PARK ROYAL HOTEL Includes 5 course dinner, h night! ‘S$ accommodation and champagne. Winner will be = randomly § selected. (GBS 1139 LonspALe AVENUE, NORTH VANCOUVER _.