July 23, 2009, Vancouver – The harmonized
sales tax announced today will deliver another blow to British Columbia’s struggling tourism
industry, reports the Canadian Restaurant and Foodservices Association (CRFA).
The tax on restaurant meals will jump from 5 to 12 per cent, hitting families
in the wallet and discouraging international tourists.
“This government made a promise less than three months ago to the people
of British Columbia
that there would be no new taxes,” says Mark von Schellwitz, vice president Western Canada for the CRFA. “Harmonization will result in a
permanent tax shift of hundreds of millions of dollars to our customers.”
To make matters worse, a 12 per cent tax will likely accelerate the sharp
decline in international tourists visiting British Columbia. “U.S. tourists are already shocked
by the five per cent GST when they dine out in B.C.,” says von Schellwitz.
The HST will also discourage local restaurant customers, who can buy the
same or similar food tax-free at grocery stores. Grocery stores now offer frozen, heat-and-eat
versions of just about every item on a restaurant menu — from lasagne to
samosas — and all tax free.
“As one of the largest employers in British Columbia, we’re deeply concerned
about the damage the HST will do to restaurant owners, their customers and
their employees,” says Garth Whyte, CRFA president and CEO. “Government should be creating the conditions
for these businesses to prosper and grow. The significant tax increase on
restaurants caused by harmonizing the PST and GST in this province will do
precisely the opposite.”
The HST will result in a permanent drop of $750 million a year in
restaurant sales in British Columbia
— or nearly $50,000 per year for the average restaurant — according to a CRFA
calculation using an econometric model from the Conference Board of
Canada.
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