The announcement of enforcing HST to property, services, and goods will be effective July 1st, 2010 and now the question is how this will affect Recruiting Agencies in Ontario. More specifically, Contractors in Ontario.
My first impression having limited background in this topic is that Agencies will primarily take the burden of increased taxes.
From an Agency perspective, margins aren’t like what they used to be. The Recruitment Industry grew exponentially in the 90’s, driving margins down significantly. Now in 2010, margins are slim and HST has the potential to knock out the “little guy”. As the little guy, they cannot afford to take on the burden and the expectation is that the client won’t absorb these added costs.
Will this then be transferred to the Contractors to absorb? Rates have started to increase after the lull from 2008/2009. Market trends show that rates will eventually increase although with HST in affect, will Contractors now be expected to pay more.
My thought is that Agencies will primarily pay the burden for the first while, and this will then be transferred to the Contractors. Agencies will look to Contractors to pay for the burden and while the market remains competitive for candidates, can they afford not to?
I am very interested in your thoughts.