Restaurants Canada is calling on provincial governments to follow the national lead on a temporary GST cut and cut PST on the same list of items.
“We commend the governments of Newfoundland and Labrador and Ontario for their leadership in matching the federal cut,” said Kelly Higginson, President and CEO, Restaurants Canada.
Higginson said Canada’s foodservice industry is pleased that Parliament has approved the temporary GST cut on holiday essentials, including all restaurant meals, wine, beer, cider and coolers.
“Restaurants Canada’s Chief Economist estimates this move could boost foodservice sales by nearly a billion dollars over the two-month tax break,” she said.
“The timing of the initiative is especially important, as it aligns with a typically challenging time for restaurants. January and February sales are on average more than 10% lower than other times of year, so giving Canadians a reason to go out in the cold of winter is a great support to our industry and increases the quality of Canadians’ day-to-day lives.
“This is a conservative estimate that only takes into account the tax consumers will save on restaurant meals. When GST was first introduced in 1991, it led to an immediate decrease in restaurant sales proportional to the new tax. Even if Canadians don’t increase their restaurant spending, the 5% that would have gone to the government through GST will now remain in the business, increasing profits.”
Canadians will be saving money on a wide range of essential purchases
Higginson said Canadians will also be saving money on a wide range of essential purchases such as diapers, children’s car seats and clothing, prepared food and snacks, and more. Putting more money in their pockets at a time when many are facing difficult decisions, like keeping the lights on or buying gifts for the holidays, will relieve some pressure and allow them to spend a little more on discretionary purchases than they had originally planned.
“Restaurants Canada has already reached out to the major POS providers and been assured that the changes will not be onerous or costly to implement for restaurant businesses. We expect more information to come from government now that the tax holiday is official and will share details with restaurant operators as they become available,” said Higginson.
“While the timeline for implementation is short, it’s important to remember that our industry is in worse condition now than at any point in recent history, including the pandemic. More than half of restaurant companies (53%) are operating at a loss or just breaking even, compared to just 12% pre-pandemic. A 5% increase in sales is a lifeline that will save many from the brink of closure and carry them through the typical January and February slump in our industry. It will also protect jobs and increase hours for hourly employees, who typically face reduced hours during this season. Restaurants Canada calls this a win-win-win.”
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