A proposed half per cent sales tax increase in Metro Vancouver has already faced opposition in the region, with some arguing the transit levy would give an advantage to businesses in communities such as Abbotsford and Mission, which are not impacted by the fee.
Metro Vancouver residents will vote in a spring referendum whether they support the proposal to increase the sales tax by 0.5 per cent within its borders in order to fund growth plans for TransLink, which provides transit service in the Metro area.
Allan Asaph, executive director of the Abbotsford Chamber of Commerce, said the local organization supports the plans for the Metro Vancouver Congestion Improvement Tax – “but not for the reasons some of the opponents think.”
The borders of Langley-Abbotsford border and Maple Ridge-Mission are the boundaries of Metro Vancouver. Langley’s chamber has come out against the project, citing the lack of plans to mitigate the impact on the city “due to leakage of investment and consumers into Abbotsford and the U.S. to avoid a regional tax.”
But Asaph said the Abbotsford chamber’s support is not because local businesses would get a boost from shoppers leaving Metro – he doubts there would be a large shift – but because the tax is a fair and equitable way to raise much-needed funds to address traffic issues in Metro Vancouver.
If approved, it is possible there could be a short-term surge while people “make an emotional expression” in opposition to the tax, but in the long-term the convenience of sticking with old shopping habits will trump the small savings of heading out of region, he said. Due to personal preference, many people in Abbotsford go to Metro to shop, Asaph noted, adding he thinks this would continue even if that came with an additional tax.
The bigger issue is the ongoing pressure on the transportation system in Vancouver coupled with the region’s projected growth, said Asaph. Reducing congestion is important as commercial traffic into the region increases.
“You can’t take the material out of a truck and put it on a SkyTrain or a bus.”
While Metro businesses such as car dealerships have raised the alarm that people will be more likely to go out of region for large purchases – Asaph said many of the high-end auto manufacturers don’t have dealerships outside of Metro.
But Layne Magnuson, dealer principal at Abbotsford’s Magnuson Ford, said for “such a big-ticket item” like cars, people may be more willing to shop around to save some money.
“I live in Maple Ridge and I know people who travel to Mission to save a little on gas – and I know the outer-lying, border cities to the Valley will feel it (the tax).”
He said right now it is hard to say if Abbotsford auto dealers would see more business due to the tax, but concerns in border communities are legitimate. He said while it may not impact someone looking to buy a new TV, with some of the trucks at the dealership starting at $50,000 the tax would add up to about $250.
While some customer shop based on loyalty, others will travel to save money, much as people shop online to find out where deals are, he said.
While he is unsure that the tax will proceed, Magnuson said something definitely needs to be done to address gridlock in Metro Vancouver.
Blair Qualey, president and CEO of the New Car Dealers Association of B.C., said he wants clarity from the province on whether or not dealers will have to absorb the tax hike before his organization takes a stand on the levy.
“This tax could be a pretty big chunk per year for these guys if they have to swallow it to stay competitive,” Qualey said.
Even if the province charges the new 0.5 per cent tax on vehicles bought outside the region but ultimately registered within Metro Vancouver, Qualey said that may still leave questions of how it will be enforced.
In Maple Ridge, some businesses still aren’t enthusiastic about the proposal.
Scott Jones, general manager of West Coast Toyota in Pitt Meadows, said the higher levy will remove the incentive for buyers from the Fraser Valley or Interior to shop in Metro Vancouver.
“If I’m a Maple Ridge business, how am I going to compete on big-ticket items when the consumer can drive 20 minutes and not pay the 0.5 per cent PST? It makes no sense whatsoever.”
If businesses absorb additional costs in an effort to keep customers, it means subsidizing a sale.
“For big-ticket items, it’s definitely not a level playing field,” Jones said.
It would make more sense to charge the extra half per cent throughout the Fraser Valley as far as Hope, he added.
–With files from Phil Melnychuk and Jeff Nagel