Postal Strike and Tax Freeze Create Challenges for Small Business Owners

As the Canada Post strike enters its third week, along with a two-month federal tax break set to start, a small business owner from Newfoundland and Labrador is expressing her concerns about the difficulties these events are causing.

Tax Freeze Presents Administrative Challenges

Caitlin Noseworthy, the owner of Saltwater Designs, is worried about the upcoming GST/HST tax freeze scheduled to begin on December 14. She believes it will impose considerable added work on her business. "We have a large inventory, with hundreds or even thousands of products of varying sizes and styles. Updating our pricing systems in the peak of the holiday season will be tough," Noseworthy shared during an interview.

She mentioned that it is likely they will need to put in overtime to prepare for the changes. Moreover, she is concerned this shift in pricing could impact her sales negatively, as many customers may finish their holiday shopping before the tax break takes effect. "What if customers come in seeking refunds or store credits for purchases made just weeks earlier when tax-free pricing is suddenly available?" she asked.

Small Businesses Feeling the Strain

According to Louis-Philippe Gauthier, the Atlantic vice-president of the Canadian Federation of Independent Business, many small businesses report that customers are already returning items, waiting for the new tax freeze to take effect. "Customers are indicating they will return after December 14, which only adds to the frustration for small business owners at this crucial time of year," he stated.

Gauthier noted that businesses are already experiencing challenges from diminished consumer spending. A recent survey indicated that only a small fraction of business owners believe the tax freeze will boost their sales. The sentiment among members is that large retailers will benefit more from this initiative than smaller businesses.

Moreover, adapting to the tax changes is expected to cost small business owners money. Gauthier shared that estimates suggest it may cost up to $1,000 per business, factoring in changes to websites, point-of-sale systems, and the reversal of these changes in February.

Impact of Postal Strike on Sales

Noseworthy highlighted that the ongoing postal strike is another significant issue affecting her business. Due to the strike, she has turned to more expensive shipping options like UPS. For instance, shipping just four mugs to a nearby location could cost around $98 with UPS.

While some customers understand the challenges posed by these shipping issues, others face dissatisfaction. Noseworthy recounted that some customers expressed that the delays might ruin their holiday plans. She has noticed a sharp decline in online sales, with many customers opting for larger retailers that offer free shipping—something she cannot afford to do.

Gauthier’s organization estimates that the postal strike has led to nearly $1 billion in losses for small businesses across the region. He advocated for the federal government to intervene and encourage negotiations between Canada Post and the union to resolve the ongoing work stoppage.

tax, business, postal