FREDERICTON, February 2, 2016 – Increasing the HST will make it tougher for restaurants to compete against tax-free prepared meals from grocery stores, and will leave consumers with less money to spend in restaurants, warns Restaurants Canada.
The provincial budget initiative increasing the HST to 15 percent will mean New Brunswick has the highest sales tax in the country, unfairly penalizing the job-rich foodservice industry that employs over 24,000 New Brunswickers. Studies show consumers spend less at restaurants when sales taxes increase.
“Because of inherent flaws in the sales tax system and competitive pressure from other regions, increasing the HST will mean lower restaurant sales, fewer visitors to the province, and fewer job opportunities for New Brunswickers,” says Luc Erjavec, Atlantic Canada Vice-President for Restaurants Canada.
Increasing the HST would worsen the unfair tax system created by the GST. Food from restaurants is subject to tax, while similar or identical items sold in grocery stores are not.
“Increasing the HST is the opposite of what we need to get the restaurant industry and the province back on their feet,” says Erjavec. “Restaurant sales growth in New Brunswick is already among the slowest in the country, and a government-imposed increase in the price of a restaurant meal will only make it worse. We can’t tax our way to prosperity.”
The industry is also concerned by the potential impact on tourism. “Increasing the HST will be a disincentive for visitors to come here and an incentive for New Brunswickers to travel elsewhere,” says Erjavec.
During the Strategic Review Process, Restaurant Canada urged the government to exercise fiscal prudence and to make tough choices to get spending under control. New Brunswick’s taxes are already among the highest in the country and increasing them will deter economic growth.
Restaurants Canada is a growing community of 30,000 foodservice businesses, including restaurants, bars, caterers, institutions and suppliers. We connect our members from coast to coast, through services, research and advocacy for a strong and vibrant restaurant industry. New Brunswick’s restaurant industry serves 1.4 million customers every day, and directly employs 24,200 New Brunswickers.