February 9, 2010, Kentville, N.S. – Increasing the HST in Nova Scotia will cost jobs and investment in the province’s $1.5 billion foodservice industry, warns the Canadian Restaurant and Foodservices Association (CRFA).
At a finance hearing in Kentville this week, CRFA’s Atlantic Canada vice president, Luc Erjavec, told Finance Minister Graham Steele and the Dexter government that instead of hurting small businesses with an HST increase, they should reduce spending and look at other ways to generate revenue, such as selling the retail assets of the Nova Scotia Liquor Corporation (NSLC).
“Because of inherent flaws in the original HST and competitive pressures from other regions, increasing the HST will mean lower restaurant sales, fewer visitors to the province and fewer job opportunities for Nova Scotians,” says Erjavec.
Increasing the HST would worsen the unfair tax system created by the GST. Food from restaurants is subject to the tax, while similar or identical items sold in grocery stores are not.
“Increasing the HST is polar opposite to actions taken by the 27-member European Union to stimulate economic growth during these tough recessionary times,” says Erjavec. “In France the value added tax on food and alcohol sold in restaurants was reduced by over 70 per cent to stimulate the economy. Any shortfall was recouped by increased restaurant sales and jobs.”
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 Nova Scotians to travel elsewhere,” says Erjavec.
CRFA urges the government to exercise fiscal prudence and to make tough choices to get spending under control.
In terms of revenue generation, CRFA suggests that government follow the lead of Ontario and consider selling off the Nova Scotia Liquor Corporation.
“Experience has shown that selling NSLC's retail assets would safeguard provincial revenues, stimulate economic development, and reduce government costs while maintaining firm regulatory control over alcohol products.”
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