Six months after B.C.'s harmonized sales tax came into effect, the most ominous predictions about its impact on the restaurant industry have yet to come true, according to one economist.
Jon Kesselman, an economist at Simon Fraser University, told CTV News that the tax will turn out to be an economic boon for the province, and the short-term drawbacks have been far less severe than some expected.
"Most of the dire fears about the impact on this group or that group, this industry or other sections of the economy, have been proven wrong," he said.
The B.C. Restaurant and Food Services Association had predicted that the HST would lead to the closure of 1 in five restaurants across the province, and insists that restaurants are struggling since they began charging an extra seven per cent under the new tax.
One high-profile Vancouver restaurant, A Kettle of Fish, closed its doors in October, and owners said the HST was at least partly to blame.
Kesselman acknowledged that there have been some hiccups, but not to the extreme extent predicted by those inside the industry.
"We haven't seen it either anecdotally or in the surveys," he said.
The reason, he believes, is that the HST hasn't caused a huge difference in prices at restaurants.
"A seven-per-cent change in the price of something is not a 50-per-cent change," Kesselman said. "I'm sure diners were ordering less and a few people were dining out less frequently, but the impact in total is not large."
But Ian Tostenson, president of the restaurant association, argues that the situation has played out exactly as predicted.
"We predicted about a seven-to-eight-per-cent decline in restaurant sales, and in fact that's what happened," he said, adding that the total number of restaurants has decreased by about a 10th since the tax came in.
Tostenson said that the HST and the economy are both to blame, and more closures could be coming in January and February -- months when business is traditionally slow.
But he also said that the new tax is no longer the most feared villain of restaurateurs.
"HST is probably second on our problem list right now. The first problem we have is the .05 drunk-driving laws," he said.
At Corner Suite Bistro De Luxe, owner Steve Da Cruz says he definitely noticed a decrease in business after the tax was introduced in July.
"At the end of the day, people are paying more for the same thing than they were a year ago," he said.
But sales picked up again after he learned to adapt to the HST.
"I had to change the accessibility of my menu in making it more affordable," Da Cruz said.
"I think they're coming back again."
With files from CTV British Columbia's Jina You
