Newfoundland & Labrador Election 2021

Retailers are resilient and despite unprecedented challenges brought on by COVID-19, continue to fight to remain a viable and essential element of the province’s economy.

COVID-19 has created significant disruption to Newfoundland and Labrador’s retail sector.  In 2019, the retail sector provided a $8.9 billion boost to the provincial economy and almost 29,000 jobs. Beyond COVID-19, Newfoundland and Labrador retailers are facing significant cumulative costs and competitive pressures. In the modern age of retail, there is no certainty of continued success as national, online, and offshore channels threaten brick-and-mortar Newfoundland and Labrador stores.

Recommendation:

• Work with Retail Council of Canada to develop a proper retail recovery strategy, commensurate with the size of the retail industry. While other industries have been the focus of sector strategies and incentives, the retail industry has long been overlooked. The ongoing costs stemming from the COVID-19 pandemic (including health order requirements) have only created increased pressure on the province’s retail sector.  RCC is calling on the government to be a collaborative partner in finding solutions.

Newfoundland and Labrador has established a predictable model for calculating annual minimum wage adjustments based on the Consumer Price Index. The approach helps ensure politics are removed from the process, and that minimum wage increases are balanced fairly between the interests of employees and employers. Newfoundland and Labrador’s model also mandates a review every two years to ensure that the province’s wage remains competitive within the country. Dramatic and rapid increases, such as those seen in recent years in Alberta and Ontario have been shown to harm opportunities for those with the least experience, especially youth.

Recommendation:

• Maintain the current CPI linked approach to minimum wage adjustments so as to ensure a transparent, predictable formula and adequate lead time for budget planning.

Competitive tax rates are an important tool for governments to attract and retain businesses.  Newfoundland and Labrador’s commercial tax rates are competitive within Atlantic Canada while the province’s Harmonized Sales Tax (HST) is equal to that in the other Atlantic provinces. However, recent tax relief for both small and large businesses in neighbouring Atlantic Provinces suggest that Newfoundland and Labrador may be losing some of its competitive edge.

Businesses also deal with the annual burden of paying for the various fees charged by government.  Individually, these fees do not generate a significant amount of revenue for government but they do create a negative impact for retailers across the province.  Retailers understand that they need to be licensed in order to sell certain products.  However, it can be frustrating when a small, rural retailer has to pay hundreds of dollars in licensing fees to meet demand for certain products from a small but loyal customer base.  For some of the fees charged to businesses, the minimal amount of revenue received by the government does not outweigh the negative impact that such fees have on small businesses.

Recommendation:

• Commit to not raising corporate tax rate or the HST during your mandate.
• Commit to a review of the numerous fees charged on businesses.

The pandemic has resulted in significant increases in online sales, primarily benefiting non-resident, foreign eCommerce sellers. Those retailers have lower property and labour costs than brick and mortar provincial sellers, and generally provide their employees significantly lower pay and benefits. They also do not employ Newfoundlanders and Labradorians. Many non-resident eCommerce entities sell into the province without paying eco-fees, yet the packaging for their shipments and products; as well as the products themselves at end-of-life, are discarded into our recycling system. Governments are currently paying these costs.  However, should the province eventually move forward with an Extended Producer Responsibility (EPR) program for packaging, Newfoundland and Labrador’s brick-and-mortar retailers would be paying these costs on behalf of their competition. This process would ultimately subsidize foreign online sellers, from the United States, Asia and beyond.

Recommendation:

• Ensure eCommerce sellers from outside Canada pay their fair share of taxes and fees. Newfoundland and Labrador citizens and Newfoundland and Labrador retailers should not be forced to subsidize foreign eCommerce sellers who are taking a free ride on the backs of local businesses.

RCC commends the government for its efforts to support businesses during the COVID-19 pandemic.  However, it should be noted that not all businesses have been able to access government support programs to assist them in remaining open.

One direct way that the Newfoundland and Labrador government can help support struggling small businesses is through the introduction of refundable tax credits to help lessen the cost impact of COVID-19 related store renovations and purchases of PPE.

Many local retailers, and the business community, are facing severe challenges and need urgent assistance. Tax deductions do not provide immediate help, whereas refundable tax credits would have a more beneficial impact. Ongoing costs tied to PPE equipment for staff, increased safety training, and other resources are necessary, but create a substantial expense at a time when finances are being squeezed.  Refundable tax credits would provide substantial assistance in helping retailers create and maintain a safe retail environment for their employees and customers.

Recommendation:

• We urge government to use refundable tax credits, as a way to provide practical assistance to companies incurring eligible COVID-19 expenditures.

RCC commends the provincial government for finally taking a leadership role regarding single use plastic checkout bags. For a number of years, the provincial government’s refusal to provide direction regarding these bags, led to a confusing patchwork of local initiatives from municipal governments. Municipal action in areas of environmental stewardship that impact industry can lead to the creation of bylaws that are not harmonized with best practices in the rest of Canada. Such actions can needlessly create public confusion, administrative red tape and increased costs for businesses in the province.

Recommendation:

• With regards to environmental stewardship issues that impact industry, the government should provide leadership in taking action at the provincial level. Provincial action related to environmental stewardship should be harmonized with existing solid waste regulations and stewardship programs across Atlantic Canada.