Friday, August 6, 2010

One month in with the HST

I am trying to get a sense of the impact of the HST.   No one I have talked to that is not a partisan poltico has admitted to the HST having any significant impact on them, in fact most people do not seem to have noticed.

Restaurants are clearly seeing an impact, but that spending has to be going somewhere else.   Are people spending less?   Are they saving more?   Are they spending their money on something else?   If people are spending less and reducing their debt levels, this is an important impact for the economy as people are holding too much debt.   If they are spending it on something else, what is it.

I can not get any sense if there has been a boost in renovations, we should see something over the next few months as the costs drop for a renovation.

The film business is benefiting, but they are struggling against a low American dollar.   The HST should equal to a four cent drop in the dollar for them.   Film has a very long lead time and it will take sometime to see the benefit. We also suffer from the fact that our main competitor in Canada has also adopted the HST.  

Manufacturing in BC should see a rise in internal sales and exports, but it will be hard to measure as the effect will be a 2-3% boost per annum.

Capital spending takes a long time to come into place so it will take sometime before we see an increase in major capital projects.

So short term restaurants are suffering and the other benefits have not come to pass yet.    What is clear is that there has been no major negative impact of the HST is the first month.   The hysteria about the HST is not going to play out as thought and the issue may begin to fade for the majority of people.   The serious opponents may be in for a surprise in the fall and find the sort of anger they were expecting is no longer with us.

1 comment:

Sacha said...

The other significant piece of news appears to be the demand shift from post-June to pre-July on new home sales as a result of the HST - although there is a 5/7ths offset on the incremental 7%, I think this was sufficient to bring a lot of demand forward into the real estate market, at the expense of the second half of the year.

I don't know what proportion of home sales are new vs. non-new.

Also, the majority of the backlash appears to be the manner it was brought in, as opposed to the tax itself.