(Sep. 11/13) The federal government announced tough new penalties today for anyone who makes, sells or uses electronic sales suppression (ESS) software, commonly known as “zappers.” CRFA President and CEO Garth Whyte joined National Revenue Minster Kerry-Lynne Findlay for the announcement at an Edmonton restaurant, and applauded the move.
“We’re very pleased the federal government listened to our concerns and is targeting the underground economy, rather than the above-ground economy,” said Whyte. “The vast majority of restaurant owners operate in full compliance of the law, and welcome measures that protect the integrity of our industry and create a level playing field for their businesses.”
When the federal government first announced it would be cracking down on tax evaders, CRFA urged the government to focus on those involved with ESS software, instead of targeting all restaurants through mandatory and costly sales recording modules (also known as “black boxes”) on every cash register, as Quebec did. If Ottawa had followed the Quebec model, the cost to the average restaurant would have been $4,500 plus ongoing costs and red tape.
Click here to read the government’s announcement.
Click here to read CRFA’s response.
Why the Quebec model doesn’t work
In Quebec, the government tackled the underground economy by mandating a black box on every cash register in the province’s 16,000 restaurants. In response to CRFA’s concerns, the Quebec government offered financial assistance for business owners to install the modules. However, the initiative created ongoing costs and red tape for the province’s restaurant owners, including the vast majority that were already complying with the law.
Savings to members
CRFA is pleased the federal government listened to our concerns and took a fairer route. If they had followed the Quebec model, the average member would have had to pay $2,000 per cash register or $7,000 for several cash registers.*
CRFA has been fighting the mandatory installation of black boxes in restaurants across Canada since August 2011, when the media misleadingly reported that one-third of the country’s restaurants use zapper software to hide sales and avoid paying taxes. CRFA urged government to work with our industry on a fiscal evasion strategy, instead of punishing the vast majority of tax-compliant restaurateurs. Our efforts paid off when the government announced its plans to target those involved with zapper software in the 2013 federal budget.
*Costs based on what restaurateurs had to pay in Quebec