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Input Credits Won’t Help Service Industry
May 2010
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| Richard Senechal, manager of CG Maintenance |
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By Hayley Mitchell
Richard Senechal, manager of CG Maintenance, a janitorial and cleaning service that has been in business for more than 60 years, says that the HST will affect him and his condominium and property manager customers greatly, as he sees it as an overall 8 percent increase in costs that will be transferred to the clients to cover.
Senechal says that the HST will impact his company and his clients even more so, especially on the services side. “All services are taxable and that is a straight 8 percent, bottom-line increase,” he says. Any of the cleaning and janitorial services that the condos require will be taxed and additional 8 percent, which is a steep increase, especially when the main goal of every condo board is to reduce costs each year. Senechal says that he is always trying to implement ways to save his customers’ money, but this tax is going to counter act those cost-savings attempts.
Seneschal acknowledges that the government is providing a tax relief of some of the input costs, such as materials, which is intended to reduce the entire 8 percent increase. However, by industry standards, he says that in cleaning and janitorial services, 90 percent of the cost is labour, five percent is equipment and five percent is supplies. “On that five or 10 percent you have an input tax credit, but in the whole relationship it’s really nothing,” he says, “So the end users, our clients, are going to get hit.” GC Maintenance, which refers to itself as a small company, will be responsible for drawing from its clients, more than half a million dollars in extra tax alone. Put that example in the scope of the entire condominium industry and the numbers are staggering.
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