March 27, 2009, Toronto – Yesterday’s budget showed that the Ontario
government is committed to making the transition to a single sales tax as
painful as possible for the province’s foodservice industry and its
customers.
The budget will:
-increase taxes on basic restaurant meals under $4.00
-deny consumers the savings they should receive when the tax
on beverage alcohol purchased from restaurants is cut from 10% to 8%
-delay access to input tax credits on food and beverages for
five to eight years for many businesses, and withhold other key input tax
credits such as energy for some foodservice operators
-eliminate the $1,500 processor credit businesses receive
each year for collecting the provincial sales tax
“It’s death by a thousand cuts for Ontario’s restaurant
operators,” says Stephanie Jones, Vice President Ontario for the Canadian
Restaurant and Foodservices Association (CRFA).
“Our costs are going through the roof, sales are slowing dramatically,
and this budget will only worsen the situation for foodservice operators and
their customers.”
In this tough economic climate, the average restaurant owner
in Ontario survives on a profit margin of less than three per cent of revenue –
the lowest in the country. Annual
revenues at the average Ontario restaurant are 13 per cent lower in real terms
today than they were in 2000. At the
same time, the Ontario government has mandated a wage increase that will cost
the industry $265 million.
“Sales tax harmonization presents a perfect opportunity to
restore tax fairness when it comes to food purchases,” says Jones.
“We are disappointed that the government has not consulted
with Ontarians on this issue and that they have not embraced this opportunity
to critically review the unfair application of the GST before simply embedding
these flaws in a new blended tax.”
Print this page
