Some Halifax Businesses Are Now Charging a ‘Covid Tax.’ Here’s Why.
HALIFAX — Haligonians might be reaching a little deeper into their pockets to support the local economy these days, as some Halifax businesses have started adding “Covid-19 surcharges” to their bills.
Covid-19 surcharges are showing up across the city: a 20 percent fee on top of your normal bill at a restaurant, a $15 “sanitation fee” at a spa, an extra $2 at your barber, or a new PPE charge on your dental bill.
For some customers, these new charges feel like a slap in the face or a dirty trick. But many local business owners say they need Covid-19 surcharges to help them cover the costs of operating during a pandemic.
Dana Sharkey is the executive director of the Cosmetology Association of Nova Scotia. She says most of her members are charging some type of Covid-19 surcharge, usually to cover the cost of extra cleaning or personal protective equipment (PPE).
Masks are mandatory in salons and spa in Nova Scotia, so most businesses will provide disposable ones for clients.
Spas, barbers, massage therapists and similar businesses also have extra cleaning to do between each client. This cuts down the number of clients that can be seen in a day and increases the cost of cleaning supplies, further eating into profits.
Sharkey says Covid-19 surcharges help businesses cover these new costs.
“Everything they have to buy is very costly, so it’s their way of trying to increase [their profit] a little bit to cover some of those costs to help them to bounce back,” she says.
Dr. Chad Avery, the president of Nova Scotia Dental Association, says the situation is similar in dentistry.
“There’s a number of different things that have changed in our offices that are adding to people’s overhead and as part of the business that ultimately gets reflected in what our consumers have to pay,” he says.
Dentists also can’t see as many patients a day and have new costs associated with cleaning and personal protective equipment. Avery says some have even hired extra staff to keep up with new Covid-19 requirements.
“I think a lot of offices are finding they have to hire additional staff to run between operatories, to screen people at the door, to follow up with people afterward, to do initial screenings,” he says.
Covid surharge ‘tough to justify’?
Stu Cochrane, of Halifax’s Blue Collar Barbershop, is a small business owner who isn’t charging his customers extra because of Covid-19.
Cochrane was able to keep his costs low because he had a forgiving landlord and qualified for some government assistance programs. But he realizes not all businesses have been as lucky.
“If I was unable to acquire what I did I’m sure I would have had to raise my prices. If you weren’t able to receive any of the assistance but still made it through to reopening you would have no choice but to raise your prices,” he said.
Cochrane said the combination of PPE and sanitization supplies becoming “exorbitantly overpriced” and the extra time it takes to clean and disinfect mean lots of businesses can no longer turn a profit without bumping up their prices.
“It’s one of those things that is definitely dependent on margins. If you’re operating at a 35 percent profit margin and just had to subtract 35 percent of your business for mandatory disinfection time, you’re only breaking even—[and that’s] before you even buy your masks, hand sanitizer [and] extra disinfectant. So it can be very hard to operate without being in a deficit,” he says.
“There is no sympathy needed when a business raises prices for any reason, it’s simply that businesses decision and they hold every right to raise prices at any time for any reason, but Covid surcharges are a very valid reason,” he added.
Another small business owner in Halifax, who wished to keep his name and business anonymous, said he never considered charging an extra Covid-19 surcharge and would not return to a business if they charged him one.
“I think it’s pretty tough to justify a [Covid-19] surcharge when the government is giving us grants for PPE and wage subsidies and rent,” he said.
He said charging an extra fee to cover the cost of Covid-19 makes as much sense as charging a “roof surcharge” to recoup the cost of roof repairs after a bad hurricane.
He runs a business where he serves multiple clients over the course of the day and needs to clean and disinfect between each appointment. He had to buy extra cleaning supplies to make that happen but was able to absorb the cost without passing it on to his customers.
“Certain things are just a cost of doing business and customers shouldn’t have to pay for that,” he said.
It’s not just about buying masks
Issmat Al-Akhali is the owner and operator of Granville Hall Student Residence in Halifax.
He says Covid-19 surcharges aren’t just about buying some extra masks. He says most businesses aren’t just eating the cost of extra cleaning and PPE, they’re eating that cost while trying to deal with severely crippled profits.
That restaurant charging an extra 20 percent on top of their normal bill? It’s fielding those same cleaning and PPE costs while only being allowed to operate at half capacity.
Al-Akhali’s own tourist accommodation business is only at about 20 percent occupancy when it should be at about 80-90 percent for this time of year. Meanwhile, he’s paying extra staff time so he can keep the kitchens, bathrooms, and common areas properly disinfected.
“Bills are going up left, right, and center. You’re buying additional supplies and you’ve got ongoing staffing costs and all that is not balanced by more business…. In fact, you’re operating at 50 or 60 percent less than usual,” he says.
Al-Akhali says he’s already burned through his $40,000 CEBA loan trying to stay afloat. He says he’s put his family through a lot trying to build his business over the past three years and is worried it might not survive.
“We’re just starting to get to the end, see some light at the end of the tunnel,” he says. “We were looking at opening some other locations, and then this thing hit and now I’m just clawing trying to keep it alive long enough to get back and hopefully save it – otherwise it’s many years down the drain.”
Al-Akhali says he will likely tack a Covid-19 surcharge onto his bills, which will be the cost of extra cleaning and supplies divided by the number of people staying at Granville Hall.
The goal, he says, will be for that charge to go down and eventually disappear once his occupancy is back to more normal levels.
He points out that lots of businesses that aren’t putting a Covid-19 surcharge on their bills are still raising their prices anyway. A separate charge comes with a little more sticker shock, but Al-Akhali believes it’s more transparent.
Although things are tough for businesses right now, Cochrane doesn’t think customers will abandon local businesses, even if they are charging a little extra.
“I truly believe this is a great time for businesses to flourish,” he says. “So many people [are] screaming for haircuts, or to go out for a bite to eat, or anything to feel some normalcy. If we all do what we need to to survive we will still have a beautiful local small business scene once we’re able to ease up our restrictions.”