How will you adjust your prices to reflect the HST?
It's a question B.C.'s service sector has had to grapple with as the controversial tax has become a reality, and one that's being debated as British Columbians vote in the referendum that will determine the fate of the tax.
Take, for example, haircuts, which were among the services and products hit by the new 12 per cent HST. How has this affected hair salons?
And while B.C.'s booming film sector has lined up behind the HST because it pays off for producers who can claim it back from the government, is there a different reality on small-service operators working in the industry, like film-catering companies?
The Globe and Mail's Ian Bailey talked to a pair of companies - a hair salon and a caterer - to find out how the tax has impacted their businesses.
Award-winning hairstylist Anthony Crosfield is acutely aware of the impact the HST has had on his Mine Salon in Vancouver's Mount Pleasant neighbourhood.
He ticks off changes he can see in his salon, located on the main floor of the iconic 99-year-old Lee Building that is the heart of the funky neighbourhood.
Customers, he says, have been giving a second thought to retail purchases such as shampoos and conditioners. Some have been wary about "bigger-ticket" services so are getting colours that endure between appointments, or avoiding full heads of highlights.
He had junior stylists cut prices. A men's haircut costs $40 to $50. It's $60 to $100 as an average for a shampoo and cut for women.
But the familiar narrative of HST angst ends with his own services. The award-winning stylist, who is much in demand, has maintained his own regular prices.
"I actually didn't change my pricing at all," he says. "I don't feel it's necessary for me to devalue my services because of a consumer-based tax. I've worked 25 years to be where I am. I am not about to start putting my prices down."
Mr. Crosfield, who has run his salon for 10 of his 26 years in the business, says many of his clients are dedicated enough to be undeterred by an extra on the price of a cut, for example.
"It's not my job to mitigate a consumer-based tax. I will do what I can to keep my business, but I am not going to rearrange how I do my business."
As the HST was introduced, one of the sticking points was that it would impact haircuts, a staple service most can't do without.
But Mr. Crosfield says the bottom line, at his business, has been consistent with last year's numbers and those of previous years.
Indeed, he says that though retail purchases were affected and junior stylists charge less, there has been some good news. The HST is easier to process as a business expense, which has freed up money to hire more staff.
"You would definitely pay somebody to be taking care of your accounting on that on a weekly basis," he said, noting he can now funnel the money back into his business. "As a whole business, it just made it a whole lot easier to be able to collect a single tax, pay that through and be able to narrow down the bookwork a whole lot."
He compares the previous GST-PST division to a "two-headed snake," and says things are now easier. The reduction in bookkeeping costs allowed Mr. Crosfield to hire what he calls "revenue-generating" staff. "It's not just employing somebody to do your bookkeeping, but hiring someone I can train to be a hairdresser who will bring more money into my business."
Mr. Crosfield said he has had the latitude in his business to adapt, adding more value-added service such as free conditioning treatments, or incentives for frequent visits. That, he says, puts him in a better position than more corporate rivals.
"A lot of the larger chains or the franchise salons are having a hard go of it because they don't really have the ability to add something special."
When films like X-Men 2 and Mission: Impossible: Ghost Protocol are filmed on the Lower Mainland, actors and crews have to be fed on location.
That reality has sustained Tivoli Moving Pictures Caterers Inc. for 15 years of catering service to crews for films featuring such characters as well as TV shows and commercials.
One recent gig involved Mission: Impossible: Ghost Protocol. After location work in India, the United Arab Emirates and Prague, the production - including star Tom Cruise - settled in Vancouver for months of exterior and interior work.
"The film industry is a small town so you are very much known by your reputation and we have been doing it for 15 years and have a good reputation and track record with a lot of the production managers in town, and that's, of course, who hires you - the production managers," says co-owner Aase Levy.
Those production officials are very mindful of the HST, which they claim on production-related expenses - including catering.
Mindful in a positive way - they like the HST. That's because pre-HST, they could get a rebate for the federal GST, but not 7 per cent PST expenses. Now they are rebated for the full 12 per cent HST.
"Of course, they don't get it back until later. But they get it all back eventually, either by deducting it from the amount owed or collecting a refund," she says.
The B.C. film industry has rallied behind the HST because they see it as alluring to production companies, who, in 2009, spent $1-billion in British Columbia.
The return of the HST can cut film expenses, helping to make the province - the third-busiest production centre in North America - attractive against competition from other provinces or U.S. states that promote themselves as locations for production.
"It's a huge savings to productions," she says. "It means an increased number of productions coming to town so more business."
Critics of the HST have argued that people who are working on the productions have to pay the tax so will ask for additional compensation.
Overall, Ms. Levy says the tax has had no impact on customers.
"The HST is a non issue for our level of business. [Customers]get it back," she says.
Ian Bailey