Removing the 5% GST on all restaurant food would save Canadians $5.4 billion in taxes annually and create 80,000 new jobs, according to new economic analysis by Restaurants Canada released on Wednesday.
“Canadians are struggling with affordability and worried about their jobs. Removing the sales tax from prepared food, including the food sold at restaurants, would not only provide them with some relief, but bolster the economy,” said Kelly Higginson, President and CEO of Restaurants Canada.
“The recent GST/HST holiday showed us that making all food tax-free stimulates spending, creates jobs and protects restaurants from bankruptcy. We urge the new federal government to make it permanent as part of their plan to address Canada’s economic challenges.”
Currently, prepared food is subject to sales tax, but groceries, as well as many frozen and ready-to-heat meals, are tax-free.
The recent GST/HST holiday, which removed sales tax from restaurant food among other items, led to a 8.6% increase in commercial foodservice sales in January. January and February 2025 also saw a 50% year-over-year decrease in foodservice bankruptcies, as well as the creation of 24,000 new jobs, more than the previous 12 months combined, said the national organization.
Based on these data, Restaurants Canada estimates that permanently removing the 5% GST on all food would lead to:
- 64,300 new foodservice jobs (40% of which are likely to go to people under 25)
- 15,685 additional spinoff jobs in related industries
- 2,680 new restaurants
- $5.4 billion in tax savings to consumers
- $1.5 billion in additional tax revenue and EI savings for government
Restaurants Canada is a national, not-for-profit association advancing Canada’s diverse and dynamic foodservice industry. Restaurants are a $120 billion industry employing nearly 1.2 million Canadians and is the number one source of first-time jobs in Canada.
“Prepared food is no longer just a luxury for Canadians,” added Higginson. “Whether its students grabbing lunch on their break, working parents picking up a meal for the family on the way home from soccer practice, or seniors getting meal delivery, many Canadians rely on prepared food to feed themselves, and they should not be taxed for it.”
Restaurants Canada said the savings from exempting all food from sales taxes would disproportionately benefit lower income households, who spend a greater share of their budgets on food than higher income households. More spending in the foodservice sector also has a greater effect in the economy at large than other sectors: for every $1 in sales, the foodservice industry generates $1.80 in economic output, compared to $1.56 generated by other industries.
“This measure is an investment in Canadians’ quality of life and in the foodservice businesses that drive the economies of every community across the country,” noted Higginson. “Food is food and should be treated equally, regardless of where it was purchased. It’s time to fix this unfair tax burden on food.”
Canadians can support Restaurant Canada’s campaign to exempt all food from sales tax at foodisfood.ca.
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