Ontario's arts community is bracing itself for tough times - with some companies predicting a potential revenue loss of hundreds of thousands of dollars - all because of the province's forthcoming HST.
The new 13 per cent harmonized sales tax, scheduled to start July 1, will mean the end of an exemption through which performing arts companies with fewer than 3,200 seats have avoided charging audiences 8 per cent provincial sales tax (PST). Not only a benefitticket buyers have become accustomed to, it's a cost many companies operating on tight budgets can't afford to absorb.
Discussions with the province are ongoing, but unless the government agrees to concessions to offset this HST effect, affected companies will be forced to boost ticket prices by 8 per cent across the board - which could also hamper other, planned, increases in ticket revenues for years to come.
"There's very little price elasticity out there right now. I think people feel that adding to ticket prices is going to be very difficult," said Antoni Cimolino, general director of the Stratford Festival. "And government's been sympathetic to that case."
Cimolino speaks on behalf of a coalition of prominent arts organizations - among them the Shaw Festival, National Ballet of Canada, Canadian Opera Company, Soulpepper Theatre Company, Sony Centre for the Performing Arts, Toronto International Film Festival, Roy Thomson Hall and Ottawa's National Arts Centre - who have met with the provincial government to discuss the ramifications of the HST.
On the surface, the group isn't making any sudden moves, but the Toronto Alliance for the Performing Arts has organized a second task force to track the HST, something its executive director, Jacoba Knaapen, called "a thorny issue."
Based on the box-office hit that Stratford and Shaw took when the GST was introduced in 1991, the National Ballet estimated that, if nothing changes, the HST could cost them 5 to 8 per cent of their ticket sales next season - depriving them of up to half a million dollars in revenue.
"That's really serious. All the costs of doing what we do are going up, and we won't be able to increase the amount of revenue that we're earning for several years," said Kevin Garland, executive director of the National Ballet.
Soulpepper Theatre Company has tried to build a safety net by forecasting a 3 per cent drop in ticket sales for each of its shows next season, but that's as significant a cushion as their budget allows. If ticket sales were to fall any farther, the company could lose tens or even hundreds of thousands of dollars.
"Arts organizations are extremely lean machines. From an administrative point of view, any additional headaches impact the entire organization," said Albert Schultz, Soulpepper's artistic director.
The arts sector is grateful to the government for giving it a break on expenses: The new HST bill allows not-for-profits and charities to claim remittances of 82 per cent of the provincial part of the new tax for some of their costs. And the coalition is no longer asking for an exemption of the kind it had on the PST. Cimolino says they understand that the government is trying to simplify the tax system while creating jobs. Instead, the coalition now hopes the province might agree to concessions elsewhere.
"They've helped us on the expense side, and it's our hope that we can maybe get some help on the revenue side, that the rules can be modified so that we can find a way of not passing on this increase [to our audiences]" Cimolino said.
"I have considerable empathy for them," said Ontario Culture Minister Aileen Carroll. But she would not comment on the possibility of other cuts to help soften the blow, and she reiterated "that this cannot become in any way a series of exemptions."
A small consolation might seecompanies use the HST to help sell their tickets earlier. As the recession dawned last fall, audiences were less inclined to commitmonths in advance. But arts groups will only have to start charging HST on single tickets and subscriptions paid for after May 1, for performances staged after July 1.
"It makes a great deal of sense for our patrons to buy tickets today as opposed to May 2, because the prices potentially could be less today," Cimolino said. "But we're still working that through."