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Should Five Percent Appear Too Small, Be Thankful I Don't Take It All: McGuinty's Budget Slams Ontario Golfers

taxmanYou thought the Ontario golf industry had enough problems — crazy pesticide use regulations, battles with uninformed environmentalists, the economic downturn, Tiger’s ailing knee and now …. cue the drum roll … new taxes on greens fees as of yesterday’s budget that introduced the so-called “harmonized sales tax”:

Ontarians will pay more on virtually every product and service they use — gasoline, utilities, haircuts, home renovations, golf green fees, lawyers and massages — as the provincial government moves to a 13%, harmonized federal and provincial sales tax next year.

The only good news for those used to only paying the 5% GST on greens fees is you’ve got a year before this kicks in. Then your cost to golf just went up 8%.

I’d try to say apolitical about this but I think Premier Dalton McGuinty is a joke — and I’ve thought that for several years going back to the point where I interviewed him a couple of times for articles while working as a business reporter at the Financial Post. He has no real platform, won the last election by bribing unthinking voters with a holiday, and continues the typical tax-and-spend ways of most Liberal politicians. The golf industry employs a lot of people and brings in a lot of revenue to the province — but raising prices by 8% has got to hurt, especially in a market where clubs are already struggling with the downturn. Just what they needed — another hit to their bottom line.

One area that has got to be hit hard by the new taxes has got to be private course fees and initiations, which used to be subject to just the GST. These clubs were already struggling to find new members and at some of the more expensive clubs — Coppinwood east of Toronto or Magna GC in Aurora or Oakdale in Toronto — you’ve just added $8,000 to their bill.

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Robert Thompson

A bestselling author and award-winning columnist, Robert Thompson has been writing about business and sports, and particularly golf, for almost two decades. His reporting and commentary on golf has appeared in Golf Magazine, the Globe and Mail, T&L Golf and many other media outlets. Currently Robert is a columnist with Global Golf Post, golf analyst for Global News and Shaw Communications, and Senior Writer to ScoreGolf. The Going for the Green blog was launched in 2004.

11 CommentsLeave a comment

  • Robert, you have some good points about this topic. Since people know the 5% is comming in 2010 a private course may see an increase of people trying to join in 2009. On the public side, people will look at a new tax as another green fee increase. Yet another reason why we here in Canada are so over taxed, hard to make a buck and hard to save a buck!

  • Robert,

    Do you really think $8,000 will make a big difference to someone who is willing to spend $100,000 to join a club? Joe Public, most likely.

    YP

  • courses will save some money from this HST. They will finally be able to write off the 8% they pay for all the fertilizer, equipment, pencils, scorecards, water they’ve been paying for now. also if they are renovations to be made, all the tax on the work will now be exempt.

    they will NOT pass on this savings, but at least they won’t feel the sudden need to charge more to cover costs.

  • ‘d’ has it right on the savings part, and as to whether or not they pass on the savings….that will be up to each club/facility. Pricing in any competitive industry, like the golf course business (public or private), will be dictated by the marketplace.

  • If the courses fear they’ll get fewer rounds, then they’ll pass on the HST savings to their patrons and there will be very little pricing difference for the customer, right?
    If not, blame the courses, not the government.

    Besides, I’m pretty sure that a leisure activity with golf’s optics is the last thing any government should worry about protecting. I mean, if you can afford $1,000 to $4,000 a summer for golf, can you really not afford $1,080 to $4,320?

    Given that McGuinty essentially bent over for the Tories on this one, it’s disingenuous to blame the Liberals for this particular round of taxing and spending, unless one is already fairly partisan. Which is fair enough, but let’s not pretend that taxing green fees has changed anyone’s mind.

  • When the GST was introduced, it was designed to replace the hidden manufacturers tax. Supposedly, prices would drop on Canadian manufactured products and it would all be revenue neutral to the government and the consumer. But in the end, it’s always about demand and supply. If you can get away with not reducing prices you will. And most companies did not reduce prices.

    Theoretically, if the ratio of PST savings to the clubs versus HST-related increases is 1:2, and clubs pass on those savings to members, this tax change will amount to a 4% increase to the consumer. Still a gouging but not as bad. However, we should be seeing price reductions from Canadian manufactured products (e.g. golf equipment – always a big seller) and that could help offset some of these extra taxes.

    Personally, I intend to pay off the balance of my Clublink initiation which was interest free (although I forfeited a discount to pay it all upfront) prior to this HST being enacted. I still have 5 years to go and at today’s interest rates,it would be better to save the 8% additional tax.

  • d is wrong – as with the gst the theory is fine but that IS NOT what will happen
    the 8% we will be able to “write off” will be offset my manufacturers increases – this is historical and will be the end of many small public courses
    ask other small business owners if they TRUST the Liberals? kudos to Robert he hit this outta the park!

  • d is definitely wrong. The majority of any courses budget is wages. There are no taxes on these, however minimum wage has gone up 9 % this year alone and will be up 25% over 3 years starting in 2010. Most wait staff, outside service staff and students are at this pay level. Fertilizers are up 50 – 100% in the past 12 months. Fuel was at record levels this past year and while down now, who knows where it will go. Add in the ever increasing price of insurance, the increased cost of all supplies (15% so far)due to the drop in the dollar and now add a 8% additonal tax to green fees and we have a formula for less golf courses in the future. I haven’t even touched on the ability to get financing for courses that are unlucky enough to have their mortgages up for renewal. Golf operators are being challenged from all sides.

  • I mentioned “will save SOME money from this HST.” Besides, this article was about specifically, the HST.

    I didn’t factor anything in regards to the offsetting increases in minimum wages (own company), or fertilizer prices (I own Agrium and Potash corp stock) which I know have both gone up.

    But if you’re a course and you are executing your master plan, rebuilding the clubhouse, buying new equipment for course maintenance or just renovating, there are savings.

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