Restaurant industry seeks food tax fairness
March 26, 2009, Toronto – The Canadian Restaurant and Foodservices
Association (CRFA) is urging the federal and provincial governments to fix the
flaws in the GST before any agreement on a harmonized sales tax is finalized.
“The HST will unfairly tax Ontario families when they buy
food away from home – at work, at school and when traveling. It’s time to treat
all food equally,” says Stephanie Jones, CRFA’s vice president Ontario.
Unlike other goods and services, the GST taxes food
according to the place of purchase. As a
result, similar and identical foods are treated differently, with the GST being
applied to food sold in restaurants while competing foods sold in grocery
stores are tax-free. GST inequities
-a 250 ml carton of milk is tax-free in a convenience store,
but subject to GST at a restaurant;
-a frozen pizza is tax-free, but a restaurant pizza is taxed;
-a $300 tin of caviar is tax-free at a gourmet food store,
but soup and a sandwich at a cafeteria is taxed.
A harmonized sales tax would embed these inequities, and
magnify them if Ontario eliminates the PST exemption for restaurant meals
priced at $4.00 or less. Lower-income and senior Ontarians, who spend a higher
share of their income on food away from home, would be hit hardest.
“It can no longer be
argued that groceries are a necessity and eating out is a luxury,” says
Jones. “Today, gourmet food stores are
selling exotic foods tax-free while families are paying GST on milk and a
sandwich purchased at a snack bar. It
isn’t fair. Ontario’s interest in harmonizing the PST with the GST
provides the best opportunity in many years to fix the flaws in the GST.”
Ontario’s 32,600 foodservice establishments generate $22.7-billion
in annual sales and directly employ more than 406,000 people.