Fighting For Tax Fairness on Food

Restaurants Canada’s fight for food tax fairness has heated up over the past few weeks, with the issue becoming increasingly prominent across Canada. So-called “affordability” measures have now been introduced in four provinces to provide sales tax exemptions on food sold in grocery and convenience stores, but not in restaurants.

Measures such as these are not a tax cut on food – they represent a tax shift between competitors that creates winners and losers. They only provide relief if consumers change where they purchase their food, favouring one type of seller over another even when the product is identical. We are reminding governments across the country of the restaurant industry’s contribution as a major economic driver and job creator that needs to be supported through smart policies.

It’s imperative that we take a strong stand against unfair policies like these that give a competitive advantage to big-box grocers in the name of affordability relief and dissuade other provinces from following suit. At the same time, we will continue to advocate with the federal government for a GST exemption on all food.

Manitoba

Since the Manitoba budget was tabled on March 24 with a PST exemption on prepared food sold at grocery and convenience stores, we have been pushing back hard.

We met with Finance Minister Adrien Sala and had several conversations with his office and with the Premier’s Chief of Staff.  We wrote to all MLAs on the issue, and our criticism of the policy was cited multiple times during debate in the provincial Legislature. Our op ed on the issue was published by the Winnipeg Free Press.  Last week, after Premier Kinew refused our repeated requests for a meeting, we called him out in a news release for refusing to engage us on a matter of such fundamental importance.  The government then pushed the bill implementing the measure through the Legislature before any further conversations with our industry could happen.

Quebec

On May 25, Quebec Premier Christine Fréchette held a news conference to announce that the government will remove the QST on several food products. Like with Manitoba, the measure is meant to address affordability concerns, targeting ready-to-serve fruits and vegetables, such as fruit salads and cut vegetable platters, and certain foods that are already tax-exempt but become taxed because of size or quantity, such as muffins sold individually.  The measure comes into effect on July 15.

The announcement stemmed from a commitment made by the Premier during her leadership campaign.  Restaurants Canada wrote to the Premier and Finance Minister Eric Girard to encourage them to ensure that any measure they would propose targeting food inflation be fair to restaurants operating in Quebec.

Ontario

The opposition NDP in Ontario took a page from the Manitoba NDP government, proposing a similar HST exemption for grocery stores.  We engaged the NDP Leader and the relevant caucus members to educate them about the folly of their proposal.  At the same time, we raised our opposition to the measure with the government, and we were pleased to see the NDP bill defeated almost immediately.

Newfoundland and Labrador

Last week, the Newfoundland and Labrador Liberal Party announced plans to introduce legislation this fall that would remove the provincial portion of the HST from food sold in grocery stores.  Restaurants Canada moved quickly to engage Liberal Leader John Hogan’s staff to ensure restaurants are not excluded from any potential tax relief measure. We were encouraged to hear that the party intends for restaurants to be included in its proposal. We also secured a commitment to meet in the coming weeks to discuss the legislation and ensure any affordability measure is designed in a way that supports consumers without creating unintended consequences for restaurants.