I have to respond to my colleague. I am still waiting to hear if a Reformer is going to run in my riding. Apparently not.
Tax inclusive pricing will be confusing for consumers. That is a myth. There is nothing confusing about tax inclusive pricing. Tax inclusive price is what is paid at the cash register. Indeed, the research that many of us have dealt with, those of us who understand it, shows that consumers will not be confused. They support tax in pricing and they support the options available to retailers.
Some of those options are to post the tax inclusive price only, to post the tax in and the tax out prices alongside each other, to use shelf or bin pricing so they do not have to resticker prepriced goods from the manufacturer, or use conversion charts so consumers can look at the tax included price for prepriced magazines, greeting cards, et cetera.
Many retailers already use these methods, particularly bin or shelf pricing. All they have to do is apply this common practice to tax inclusive pricing.
For goods priced individually by retailers business supply companies are producing stickers with the words tax inclusive price or tax exclusive price embossed right on the sticker. This will make it clear which price includes tax and which does not.
The thing I think most consumer realize is that prices change all the time in our retail establishments in this country. In fact, the idea that confusion will result is not true. Indeed, it will make life less confusing for those shoppers and consumers.
The second myth is that it will be difficult for consumer to comparison shop given that retailers may follow different pricing practices. I think with the greatest respect again there is a theory here that the Canadian consumer is somehow less willing and able to know what this is about. Most of these things are fairly easy to handle. My personal belief, in spite of what our friends on the other side will have us believe, is that the Canadian consumer is capable of handling this. It may well be that our friends on the other side are not capable of handling it. That I certainly believe. Again, I trust none of them will start taking off their coats.
The reality on this supposed myth of difficulty is that what matters to consumers is what they pay at the cash and not how retailers display tax in prices. Consumers will know the difference between a price that includes the tax and one that does not. They will compare total prices and make their purchases accordingly. That is effectively what I was talking about when I said that consumers do not want surprises when they go to the cash register.
Harmonization is something that will benefit both retailers and consumers. Another myth is that tax inclusive pricing will be costly for businesses that will pass on the increased costs to consumers in the form of higher prices. In reality governments have developed a flexible and simple set of options to ensure that businesses can implement tax inclusive pricing at a minimum expense.
For example, the need to reticket inventory will be limited and the need to reprogram cash registers will be minimal. Many of the costs associated with implementing tax in pricing are one time costs. Other expenses will be absorbed into the ongoing cost of doing business.
Harmonization will also benefit retailers in several important ways. It will permanently reduce their costs because they will no longer have to pay sales tax on their business inputs. This will save retailers in the participating provinces $30 million.
Harmonization will mean a substantial reduction in sales tax rates, about 5 percentage points lower in Newfoundland and Labrador and 4 points lower in the provinces of Nova Scotia and New Brunswick. Both these factors will mean lower prices for consumers, between 3.5 per cent and 5 per cent lower which will translate in higher sales for retailers.
Another myth is tax inclusive pricing will result in a hidden tax. With the tax clearly shown on the receipts the sales tax cannot be hidden. Consumers believe that showing the tax on the sales receipt is sufficient to ensure that they know how much tax they are paying. Indeed, in polling done, 71 per cent agreed in a survey in the participating provinces that this was both comprehensible and an acceptable way to do it.
The harmonized sales tax is something that-