Down but far from out, Mexican tourism industry heads into all-important winter season

Andrew McCredie
Sun

Premier Gordon Campbell would do well to headhunt a public relations person or two from Tourism Mexico.

After all, can there be anyone who has suffered the slings and arrows of misfortune more in the past year than the Latin American country’s tourism industry?

The industry’s struggles make the Liberals’ ballooning deficit and deflating approval rating issues seem pretty tame by comparison. First, a worldwide economic downturn of unprecedented scope decimated the number of international travellers visiting the country; then a tiny Mexican village became ground zero for a swine flu pandemic; and now hurricanes and all-around nasty weather batters its Pacific coastline.

Once the skies clear, just as they have for centuries, the Mexican people will rebuild and come back better and stronger than ever.

As the industry heads into an all-important winter season, an improving global economic outlook should help their effort, as should airfare/accommodation deals too good for Canadian travellers to pass up.

If that’s not enough, here’s a list from A to Z of what the country has to offer.

Archeology

Get in touch with your inner Indiana Jones at any number of archeological sites, featuring pyramids, caves, lost cities and sacred sacrificial bogs. Catch one of the ancient wonders of the New World at Chichen Itza, especially during the spring or fall equinoxes when the sun’s light creates a slithering serpent descending the Temple of Kukulkan. Simply otherworldly.

Beaches

Of course, reading about ancient civilizations is almost as good as being there, and there’s no better place to soak up some scholarship and the sun than a Mexican beach. My personal favourites run along the Pacific Ocean, as surf big and small is never far away, and there’s nothing like falling asleep to the sound of rolling waves.

Cancun/Cabo

The bona fide Spring Break capitals of Mexico — if not the world — the double shot of Cancun and Cabo San Lucas is party central from January through May. Tens of thousands of college students descend on the beaches and bars of these built-to-party resorts to blow off semester stresses. Be afraid. Be very afraid.

Diego Rivera

Just as the Group of Seven’s stark, desolate style defines the Canadian experience, Diego Rivera’s paintings define Mexico’s. Much of his great works are found throughout the world’s top museums and galleries, however, Mexico City’s Museo Dolores Olmedo is home to a treasured Rivera collection and one well worth a visit.

Ecotourism

Sure it’s a rather contrived buzzword, but ecotourism is a vibrant part of Mexico’s tourism business, and judging from the ever-increasing number of operators going green, it isn’t going away any time soon. One of the best tours is the Sian Ka’an Biosphere, located on the Mayan Riviera in the largest protected area in the Mexican Caribbean.

Festivals/fiestas

If there’s one thing Mexicans love to do it is party, and the nation’s calendar is littered with fiestas. Festivals large and small take place throughout the year and throughout the country. You’ve still got time to book a flight to Mexico City to catch El Día de los Muertos, the spooky Day of the Dead festival, on Nov. 2 in the city’s Mixquic suburb. Once a village in its own right, it retains its rural roots and its Day of the Dead celebration is said to be one of the most colourful.

Golf

The game of golf’s global explosion the past two decades has left an indelible imprint on Mexico, with some 150 courses scattered throughout the country. For a memorable golf holiday, check out El Tamarindo Beach & Golf Resort, located between Manzanillo and Puerto Vallarta in a 2,040-acre nature preserve. The thing about this luxury resort is even if you don’t golf, you’ll be blown away by the lush and undeveloped setting.

H1N1

Taking a page or two from Tourism Canada’s playbook following the SARS outbreak of 2003, Mexico has been on full damage control since spring, when the so-called swine flu devastated the all-important tourism business. The upshot? Great deals for Canadian travellers. And wash your hands.

Isla Mujeres

Located a dozen kilometres from the party capital of Mexico, this tranquil island couldn’t be more different from the nearby Spring Break Mecca of Cancun. Just seven kilometres long and 650 metres wide, Isla Mujeres is a great place to chill out for a day or totally unwind for a week.

Jalapeño

The little chili that launched a million heartburns is cultivated in a number of places in Mexico, but the Papaloapan River basin is where it was traditionally produced by the townspeople of Xalapa.

Kissing

Latin American countries are renowned for their homegrown lovers, but its not difficult for visitors to Mexico to find a little love in the air. Long a honeymoon destination, the country is ripe for romance.

Lime

What is it about putting a lime in a pint that makes even a rainy night in a Vancouver lounge seem a little bit of Mexico? Nearly 15 per cent of the world’s limes come from Mexico, and with the fruit growing virtually everywhere in the country.

Mayan Riviera

Few stretches of waterfront anywhere in the world offer the diverse range of experiences that this 132-kilometre tourist corridor does. There are Mayan ruins in Tulum at one end, at the other a Hooters restaurant in Cancun; there are all-inclusive luxury resorts just minutes from the quaint seaside town of Playa del Carmen; and there are five-star restaurants where a dinner jacket is required and beachside stands that serve you barefoot.

National Palace

Built more than a century before the Palace of Versailles, the National Palace in Mexico City sits on a site that has served as the seat of power since the Aztec Empire. Fittingly, the main stairwell mural painted by Diego Rivera is entitled The Epic of the Mexican People.

Oaxaca

The Free and Sovereign State of Oaxaca has more than 250 kilometres of accessible beaches, but it’s the colonial architecture in the capital city of Oaxaca that brings camera-toting tourists to this Pacific Coast state by the planeload.

Pesos

With the loonie translating to roughly 12 pesos currently, coupled with the fact the country’s reeling tourist industry has slashed prices across the board, there’s plenty of value for the Canadian dollar.

Quesadillas

There’s not a Vancouver tap house worth its salsa that doesn’t have this Mexican dish on the menu, but as the old saying goes, “Ain’t nothing like the real thing, amigo.” Best one I ever had was at an outdoor restaurant in the busy town centre of Manzanillo.

Riviera Nayarit

Located just north of Puerto Vallarta on the Pacific Coast, this new luxury resort community has quickly, and somewhat quietly, become the place to play golf in Mexico. No fewer than six championship courses are within an hour’s drive of one another, and later this month the Jack Nicklaus-designed Punta Mita Pacifico course hosts a Canadian Professional Golf Tour event, the Riviera Nayarit Classic.

Scuba/surfing

From the world-class diving sites off Cozumel to the Pacific Ocean swells off Puerto Escondido, Mexico is heaven for those who like to dive below the waves and those who like to ride them. Most resorts offer scuba certification courses for beginners, while surf schools can be found up and down the Pacific coastline.

Tourism

As integral to Mexico’s economy as natural resources are to Canada’s, international tourism to the country has taken a battering the past year for reasons it can’t control. But with more than one out of every 10 Mexican employed directly in the industry, the country is pouring resources into promoting itself around the world.

UNESCO

Mexico ranks first in the Americas and eighth in the world for the number of sites recognized in recent years by the United Nations Educational, Scientific and Cultural Organization. No fewer than 26 sites have UNESCO endorsement for their historical, cultural and natural significance.

Veracruz

Home to the highest point in Mexico — the 5,363-metre volcano Citaltépetl — the State of Veracruz is also home to the oldest still-standing Catholic chapel built in the Americas (in the village of La Antigua).

Whale watching

The Pacific Ocean off Mexico is a major whale highway, and an increasing number of tour operators are providing opportunities for tourists get close to these creatures. Mid-December to March is prime whale watching season, and with some tour operators using spotter planes to locate the massive marine mammals, your chances are good.

Xcaret Eco Park

Imagine if Walt Disney built a Mayan ecological theme park and you’ll have some idea what this place is all about. Featuring the flora and fauna of the Mexican southeast, including sea turtles, manatees and spider monkeys, the main attraction is a massive water park that lets you swim with dolphins and other marine life. Great for families.

Yucatan peninsula

Rich in history and culture, the Yucatan peninsula was home to the ancient Maya and boasts two of the greatest archeological sites in all of Mexico — Chichen Itza and Tulum.

Zihuatanejo

This laid-back Pacific Coast community is part fishing village, part beach resort and is the ideal place to recharge for a week or so. For a great dining experience, check out Coconuts. And if the urge strikes for some Jell-O shooters and techno, the bright lights of Ixtapa are just a cab ride away.

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Local wage differences show relative cost of bread, Big Mac, iPod

Sun

According to a UBS study of relative purchasing power in cities around the world, a wage-earner in Nairobi would have to work for more than 2 1/2 hours to pay for a McDonald’s Big Mac sandwich. That’s more than 10 times longer than for those in New Your and Sydney, who would need to work only 14 minutes.

Jason Lange
Province

Hurricane Jimena slammed Mexico’s Baja California peninsula with howling winds on Tuesday, drenching the Los Cabos resort area where tourists crowded boarded-up hotels.

The U.S. National Hurricane Center said Jimena packed 205 km/h winds with higher gusts.

Sheets of rain poured down from dark grey skies as Jimena’s winds buffeted the tip of the peninsula, home to golf courses, yachting marinas and five-star hotels. The hurricane was forecast to make landfall today in a sparsely populated area farther up the peninsula.

Swanky hotels nailed boards over their windows, wrapped exposed furniture with plastic and turned conference rooms into storm shelters.

Residents huddled in shelters in schools after 5,000 people were evacuated.

Torrential rain flooded main roads, turned streets in one shanty town into muddy rivers and caused a sewage system in the town of San Jose del Cabo to overflow.

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City hotelier eases into part-time work

Bruce Constantineau
Sun

Longtime city hotelier Stephen Darling won’t have to frazzle himself by working at breakneck speed anymore.

He leaves his position next week as general manager of the Shangri-La Hotel in Vancouver, just seven months after opening the upscale property at Georgia and Thurlow.

“I have been contemplating this for over a year,” the 54-year-old Darling said in an interview Friday after the surprise announcement of his departure. “My plan is to ease out of full-time work and into part-time work as an independent director.”

He was recently named a director of a Swiss-based private trust, and has put his name forward to be considered as a member of the provincial government’s new tourism advisory council.

“I would like to pick up three or four directorships and do some charitable and contract work, and just not work at 500 miles an hour anymore,” Darling said.

He rejoined Shangri-La Hotels and Resorts five years ago and spearheaded its efforts to expand the brand throughout North America. The recession delayed a few U.S. opportunities, but the Vancouver hotel opened this year and a new Toronto Shangri-La property is scheduled to open in 2012.

Darling had previously been general manager of the Westin Grand Hotel and the Pacific Palisades Hotel, which used to be a Shangri-La property.

He said he’s excited about his business future, and noted several colleagues have already called to say they wish they could do the same thing.

“There’s never an easy time to leave a hotel, but the best time is probably now, in August, before you start the business planning for the next year,” Darling said. “Then the incoming person can be involved in the business plan.”

He said he’s leaving a full hotel with revenues and market share numbers that are “blue skying ahead of the competition.”

“Our staff are happy and getting maximum hours in hard economic times, and that makes me happy,” Darling said.

Ed Brea — currently general manager of Traders Hotel Kuala Lumpur — will take over as Shangri-La’s new Vancouver general manager at the end of September. He was previously hotel manager at Island Shangri-La in Hong Kong and general manager at Shangri-La Hotel, The Marina, Cairns.

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180,000 bees at the Fairmont Waterfront sweeten the menu at hotel’s restaurant

Mia Stainsby
Sun

Chatting with Allen Garr, a journalist who also happens to be an urban beekeeping advocate, I’m happy to learn that honeybees, unlike wasps, are not carnivores. They don’t sting you, like wasps, unless you go asking for it. “I’m not sure if they’re vegans,” he adds.

So I cannot say it took any courage at all to meet some 180,000 honeybees at a third-floor rooftop apiary at the Fairmont Waterfront in Vancouver, just across the street from my office. In fact, it’s one of five Fairmont hotels in North America with bees buzzing around the property. And, after talking bees with the hotel’s beekeeper, I see a morality tale in the life of bees, which I’ll get to later.

At the Waterfront, bees check into three white condos, known as supers in the apiculture world. I can see a few bees lighting on flowering plants in the organic bee garden nearby. Looking down the street, I see the Vancouver Convention Centre’s grass roof. Soon there will be beehives there, too.

As to why we’re seeing more and more honeybee hives in public facilities, it’s becoming very clear. Without them, we’d have a radically different diet and I’m not talking about the lack of honey for our tea. About a third of cultivated crops depend on pollinators, and in Canada, honeybees are the most common pollinators.

“Without bees, 90 per cent of our food crops would diminish. Every flowering tree would die. We’d be left with corn, beans, wheat, rice, that’s it,” says Graeme Evans, the hotel’s director of housekeeping who became the resident beekeeper, thanks to his passion for bees. “In fact, we wouldn’t have the feed for cattle, chicken and pigs. Some say in the worse case scenario, if current rates of decline continue, we’d be out of bees by 2024. That’s why we do what we do.” Ditto the Paris Opera House, the White House and Chicago City Hall, apparently.

Garr, the beekeeper at the VanDusen Botanical Garden, UBC Farm, Science World and the UBC Botanical Gardens, says some 30 to 35 per cent of colonies were lost in the last year. “It was the same the year before and the year before that.” Disease, pesticides, herbicides, monoculture agriculture and habitat loss account for a good part of bee loss.

“I stand at Science World and I can see why they’re not thriving,” he says. “I look out and see steel and glass. There used to be banks and banks of blackberries growing there, an excellent source of nectar and pollen for bees; so by continuing to denature the city, removing pollen and nectar sources, we’re destroying bee habitat.”

The Fairmont Waterfront started with 60,000 bees last year and currently has around 180,000. The bees have a feeding radius of six kilometres and that includes the hotel’s own herb garden and Stanley Park. This year, they’re expecting to harvest 400 pounds of honey, which will be used by the hotel’s kitchen, and also bottled for guests. As the hotel colony grows, excess bees are split off and taken to the Honeybee Centre in Surrey where they continue to form additional colonies.

Recently, Evans captured a rogue hive of 10,000 bees from Stanley Park, which had gathered on a tree next to Fairmont Waterfront. Normally, Evans is like Jeeves, beekeeping in his impeccable suit and tie — sometimes he’ll use smoke to calm the bees — but on that occasion, he was more like Neil Armstrong in a space suit. He’s been stung five times altogether, but he’s developed a tolerance to stings. Besides, he says, for the sake of guests, the hives contain Italian honeybees, “known for their gentle demeanour.”

Evans can follow summer in the honey. “Right now, they’re bringing in a citrusy caramel flavour. It’s absolutely sublime. It’s from a lot of sources. If you go further down in the hive [bees deposit their honey in a semi-circular pattern], we’ll get licorice flavour coming from the fennel in our garden. It’s such a strong flavour that even a small amount of nectar flavours the entire honey. Our chef uses this for duck and rolling pecorino cheese. It’s excellent with wild salmon. Even further down the comb, there’s minty flavour. You can see the different colours from when they’ve extracted from different sources. The first flow is when our lavender comes out, but blackberry and raspberry are mixed in there, too,” he says.

The hotel’s chef, Patrick Dore, incorporates honey into the lunch, dinner and cocktail menus at Herons Restaurant and Lounge and through September, the restaurant will feature a $49 honey menu which includes a honey lavender vinaigrette on a salad, honey-roasted duck breast, apple pie with honey goat cheese ice cream and a mignardise of honey and white chocolate truffles.

“It’s like a tie-in with the 100 Mile Diet, which has gone viral,” says marketing director Kevin Schmidt. “This is more like the 100-foot diet.”

Highlighting the work of bees, Evans says an apple tree in the hotel garden previously yielded about 20 apples a year. Since bees were brought in, it produces more like 200. “The bees’ interaction with its flowers excites the trees,” he says, ensuring he doesn’t anthropomorphize the bees.

And yet, we end up talking about bees as if they were people. He loves their moral sense. “Their entire culture is derived around keeping the hive alive. Every bee produces one teaspoon of honey. Together, they can produce 360 pounds. We sometimes struggle in our own society with feelings of powerlessness and what we can do in the face of global warming. What if every bee thought that way and gave up on the one teaspoon?” he says, Socratically.

“If everyone does one thing to improve sustainability, think of the massive impact. It’s a very good lesson in cooperative management.”

© Copyright (c) The Vancouver Sun

Oaxaca City celebrates life inspired by the landscape

Yvonne Jeffery
Sun

Zeny Fuentes is wielding a large, wicked-looking knife in his right hand, not so much carving the slim block of copal wood in his left hand as liberating the shape within it. The knife moves quickly, blurring the metal and scattering thin strips of wood on the stone floor.

Outside the long, low studio that sits in a small field just off the main road to Ocotlan, the lightest, briefest of rain showers has threatened and then disappeared in a bank of clouds. The returning sun lights the shelves that line the plastered walls. There, Fuentes’s brightly painted panthers prowl, cats strike regal poses and dragons spread their wings.

We’re half an hour south of Oaxaca City (pronounced waha-ca), some 200 kilometres from the nearest beach and a world away from the usual perception of Mexico. But this, I think, is where the country’s heart beats.

Here, in a mountain-ringed valley where more than a dozen pre-Hispanic cultures flourished and where archeological treasures litter the landscape, the usual firm line between life and death, imagination and reality breaks down. There’s no better symbol than the “alebrijes,” the multicoloured wooden figures that Fuentes is carving. Born from the landscape and linked to the spirit of both artist and ancestors, some of his animals are pure fantasy, others indigenous and still others inspired by his travels.

Less an artist haven than simple heritage, the area around Oaxaca City — itself a UNESCO World Heritage Site, thanks to cobbled streets and Hispanic architecture such as the 16th century Convento de Santo Domingo — is known for its handicrafts.

Each village seems to boast its own unique form: green glazed clay from Santa Maria Atzompa, black ceramics from San Bartolo Coyotepec and wool carpets from Teotitlan del Valle.

Teotitlan lies east of Oaxaca, near the main route to Mitla — which, along with Monte Alban, is one of two major pre-Hispanic archeological sites. En route, fields of agave line the road, the spiky fan-like plants providing the base for the fiery mescal, cousin to tequila. Before long, our small group of travellers has arrived at the Dain Niz carpet studio, where the family’s matriarch, Francisca — also known as Mama — greets us with a Mixtec word of welcome: Siksa.

Her son-in-law, Faustino Ruiz Lorenzo, tours us around the small showroom and into the open space behind it, where a spinning wheel and loom are in action.

Mama sits and proceeds to card the sheep’s wool, dragging the gnarled white fluff between the sharp needles of two paddles to create longer, more distinct fibres.

Faustino’s wife, Rudivina, takes the fibres and guides them on the spinning wheel turning disparate threads into a unified strand of wool.

“We show you what our ancestors, they left to us,” says Faustino. “Our grandfathers inherited this knowledge.”

And he now carries it on, the focus of a larger family-run cottage industry. From natural wool comes white, beige, sand and grey–and he goes on to show us the natural dyes: pomegranates for pinks, the cochineal insect for reds, marigolds for oranges, stone moss for green.

It’s like this throughout the villages and towns around Oaxaca — family traditions live on in the crafts, horses still pull carts and elderly women use umbrellas as sun shades as they walk down stone streets.

Pomegranate, mango and avocado trees grow beyond plastered brick garden walls, fruit hanging over into the streets.

The rhythm of the land is never far away. Ask for juice in a little neighbourhood restaurant, and it arrives frothy and fresh squeezed. Flavoured water — agua fresca — is made from real fruit (watermelon or lemon, perhaps, depending on what’s in season) blended and added to water, with sugar added for taste when needed. Squash blossoms decorate plates and melt into Oaxaca’s mild local cheese in a warm tortilla for breakfast.

From crafts to food, what exists today has evolved over more than 30 centuries — making time seem somehow elastic.

The region’s seven famous moles (mol-ays), or sauces, can take more than two dozen ingredients and hours to make. A table runner woven on a backstrap loom can similarly take hours to create, and years to master.

On the celebrated Day of the Dead, Nov. 1, long-gone ancestors are welcomed back to the world of the living.

Just as Zeny Fuentes’s magical creatures meld tradition and imagination, so too does Oaxaca City preserve the old ways of Mexico — the art, the warmth and the life.

IF YOU GO

– GETTING THERE: Mexicana Airlines (mexicana.com), WestJet (westjet.com) and Air Canada (aircanada.com), among other airlines, all fly to various points in Mexico, from which you can hop a short internal flight to Oaxaca City — this makes it easy to add Oaxaca to a beach vacation.

– STAYING THERE: There’s a range of hotels available, including the Hotel CasAntica (hotelcasantica.com), a converted 16th-century convent with oodles of charm and a convenient location for Oaxaca’s very walkable downtown area. Ask for a room on the quieter second floor.

– GETTING AROUND: Driving is an option, as long as you’re prepared to be very patient in the narrow streets of old Oaxaca. Local tours are also available, however, and have the advantage of a Spanish-speaking guide. Our small group of three travelled with Diego Cruz Castaneda of Ayuso Travel and highly recommend his knowledge, flexibility and warmth.

– MORE INFORMATION: go-oaxaca.com; visitmexico.com; oaxaca. travel ; zenyfuentes.com.

FIVE GREAT THINGS TO DO IN OAXACA CITY

1. Stroll around Oaxaca City, discovering the architecture, including the baroque Santo Domingo Cultural Centre with its botanical garden, and the buildings around the central square, or zocalo, including the cathedral.

2. Indulge in archeological sites, especially the pyramid buildings of Monte Alban (ancient capital of the Zapotec people) and the intricate stone designs of Mitla (known as the City of the Dead).

3. Take a handcraft tour using one of four routes outside the city, visiting towns and villages known for pottery, rugmaking, woven scarves and table decor, tinsmithing, carved wooden animals and much more.

4. Register for hands-on cooking lessons at places such as Casa de los Sabores (laolla.com.mx) or Seasons of My Heart (seasonsofmyheart.com).

5. Go for an eco-tour in the Sierra Norte mountains, where you can bike, hike and ride horses, using inns like eco-and cultural-tourism experts Casa Sagrada (casasagrada.com) as a base.

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Founder of Entr

Ben Dachis and Alexandre Laurin
Sun

British Columbia has taken a step towards greater prosperity for its citizens with plans to harmonize its seven per cent provincial sales tax (PST) with the federal goods and services tax (GST), creating a single harmonized sales tax (HST) of 12 per cent.

This proposal is primarily an attempt to build a more efficient tax system, and not to increase sales tax revenues. Following Ontario‘s lead, this reform is now needed for B.C.’s economy to remain competitive. The PST — which raises business costs and discourages investment by taxing inputs, often many times before a final sale — is an antiquated tax in today’s world of complex supply chains, and has been abandoned by most economies throughout the world.

GST-type sales taxes are the most efficient way to tax consumption because such taxes effectively strike only once, when something is purchased for final use. The PST, on the other hand, embeds tax at arbitrary rates, depending on how often inputs change hands — about 40 per cent of PST revenue comes from taxing business inputs.

Understandably, the proposal has drawn the ire of those whose products are exempted from the PST but would be subject to HST. But the PST is applied on inputs at multiple stages of production, leading to a cascading — and arbitrary — tax bite hidden in higher consumer prices, including on currently exempted products, such as new houses or restaurant meals. On many products, such as clothing, consumer appliances, automobiles and computers, the effective tax rate is higher than the seven-per-cent PST paid at the cash register. The implementation of the GST itself, and harmonization in the eastern provinces, demonstrated that those prices will fall after the change.

A C.D. Howe Institute study examined the revenue impacts of creating an HST that exactly copied the GST and showed that such a plan would increase provincial revenues. However, there are major differences between what the B.C. government has proposed and the GST. Looking at the details of the B.C. plan shows that harmonization may be very close to revenue-neutral.

First, like the PST, the HST would not apply to gasoline or diesel whereas the GST does. By our estimates, the province left approximately $300 to $400 million per year in the pockets of drivers by maintaining this exemption.

Second, the province is providing a more generous exemption on new housing than the federal government. The GST is partly rebated on the value of new homes below $350,000. Homes above that not only have to pay GST on the value above $350,000 but also have to pay back the rebate on the value of the house below this amount. When Ontario announced it was harmonizing, it initially proposed a similarly awkward new housing rebate.

This created a firestorm of opposition from developers, and Ontario went back to the drawing board.

The new Ontario proposal responded to the concerns raised and now includes the same rebate as B.C. is proposing. Homes below $400,000 would receive a rebate compensating for the HST, and — unlike the GST — the rebate would not be recaptured. Based on estimates for Ontario, we expect this more generous rebate to reduce B.C. HST revenues by about $400 to $500 million per year.

Whether these changes make harmonization exactly revenue neutral depends on how fast, and in what sectors, the economy grows.

But these rebates go most of the way in reducing the tax bite of harmonization.

The HST will significantly lower the cost of investing in B.C., making businesses more competitive, nationally and internationally.

Evidence from numerous studies shows that harmonization raises business investment and that PST-type taxes slow down provincial growth.

Sales tax harmonization is crucial for B.C to maintain its economic competitiveness with Ontario and the rest of the world without significantly increasing taxes.

Ben Dachis and Alexandre Laurin are policy analysts at the C.D. Howe Institute.

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Majority say they’ll cut back on labour in response to sales tax starting July 2010

Fiona Anderson
Sun

More than 90 per cent of restaurant owners in British Columbia who responded to a survey said they would be negatively impacted by the province’s new harmonized sales tax, coming into effect in July 2010.

Seventy-one per cent said they would have to cut back on staff or staff hours, the survey by the Canadian Restaurant and Foodservices Association found.

Labour “is one of the few variable costs that [restaurants] can control, so that’s usually the first thing to take a hit when sales go down,” said Mark von Schellwitz, CRFA’s vice-president for Western Canada.

The problem is that in B.C., food at grocery stories, including prepared foods such as frozen pizzas, are tax-free, von Schellwitz said. But food from a restaurant, including a pizza parlour, is not.

Restaurant food is already taxed because it is subject to the federal goods and services tax of five per cent, he said. With the HST — which will combine the GST with the seven-per-cent provincial sales tax — the tax on the food portion of the bill will increase to 12 per cent, and restaurants will become even less competitive compared to store-bought food.

“We just want all food to be treated equally,” von Schellwitz said.

Tax on alcohol with a restaurant meal is currently 15 per cent, the five-per-cent GST plus a 10-per-cent social services tax. Von Schellwitz said he understands that under the new HST, the tax on alcohol will drop to 12 per cent.

But given that 80 per cent of restaurant receipts are for food and 20 per cent for alcohol, that drop will have only a small effect.

The CRFA was to meet with Finance Minister Colin Hansen today to discuss what can be done to fix what the CRFA is calling “this major tax shift.”

But the provincial government’s hands may be tied, as under its agreement with the federal government, it has only a limited ability to provide point-of-sale rebates to replace exemptions that currently exist. In announcing the HST, the province opted to provide rebates for children’s clothing, books, gas, and to a limited extent, new home sales.

Jock Finlayson, executive vice-president of policy with the B.C. Business Council, agreed that the restaurant sector faces a challenge as the extra tax on restaurant food widens the difference between eating out and eating at home.

But the restaurant industry survived the imposition of the GST in 1991, which when first introduced was seven per cent.

Finlayson believes that while there may be an initial impact on sales, the number of people going out to eat will revert back to its current growth trend.

“I don’t think the consequences are likely to be as severe as they’re fearing,” Finlayson said.

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