N.L. budget raises HST and taxes, holds line on beverage alcohol taxes

St. John’s – Increases in Newfoundland and Labrador’s HST and income tax rates will shrink disposable income, putting even more pressure on the province’s restaurants and bars, according to Restaurants Canada.

“With the restaurant industry already struggling because of the downturn in the provincial economy, foodservice operators in Newfoundland and Labrador were dealt a blow with today’s provincial budget,” the association said in a news release.

“We are deeply disappointed that the government broke its promise not to raise the HST,” said Joyce Reynolds, executive vice-president of government affairs with Restaurants Canada. The province had previously said it would not increase HST, but the budget contained a two per cent surge in the tax rate. 

“That’s twice the headache for restaurants, because the HST is not applied uniformly across all sectors,” Reynolds said. “It discriminates against restaurants, where customers must pay HST, relative to grocery stores, where HST is not charged on many of the same or similar foods and beverages. It’s going to take a bite out of restaurant sales at a time when many businesses are already scrambling to make ends meet.”

The only bright note in the budget was the province’s decision not to increase beverage alcohol taxes, said the association, which gave Newfoundland and Labrador the lowest grade in the country on its 2015 report ranking provincial liquor policies across Canada.

Close to seven per cent of Newfoundland’s workforce is employed in the restaurant industry, and $1 billion in annual sales are generated by restaurants in the province. The industry is the top source of first-time jobs for young people.