Hospitality industry could lose $140 million in sales
The Saskatchewan government has created an unfair playing field for the province’s struggling restaurant industry by adding an increased PST to food purchased from restaurants, while the same or similar food items at grocery stores remain tax-free. This tax will have a devastating impact on restaurants at a time when they are already facing declining sales due to the economic downturn. Restaurants Canada estimates this will cost Saskatchewan’s hospitality industry $140 million in lost sales.
“We’re extremely disappointed with this unfair tax policy that creates winners and losers in the food industry,” said Mark von Schellwitz, Restaurants Canada’s Vice President, Western Canada. “Our members are perplexed the government has ignored our advice, and is instead punishing the sector of the food industry that creates the most jobs and economic activity. Clearly this policy benefits large corporate grocery stores at the expense of thousands of labour-intensive small businesses that make up the hospitality industry.”
To add insult to injury, the government is also increasing liquor markups by between 4.0 and 6.8%. Both the new meal tax and liquor price increases are effective April 1, providing restaurants with little time to adjust to the new taxes.
“When previous governments twice tried to add PST to restaurant meals, more than 130,000 Saskatchewanians made it clear there’s no appetite for a meal tax in the province,” said von Schellwitz. “We believe the people of Saskatchewan are equally opposed to a meal tax today.”
Due to a troubled economy, the Saskatchewan budget cuts back spending and increases the PST with a plan to return to a balanced budget in three years.
“We understand this was a tough budget for tough times, but adding a new 6% meal tax and a liquor tax increase is not the answer. It will only make matters worse for Saskatchewan’s hospitality industry and their customers,” said von Schellwitz.
Restaurants Canada is one of Canada’s largest business associations, with more than 30,000 members representing restaurants, bars, caterers, institutions and other foodservice providers. Saskatchewan’s $2.3 billion restaurant industry is Saskatchewan’s fourth largest employer employing more than 38,000 people in communities across the province.