What the federal budget means for restaurants and small businesses

Restaurants Canada called the 2017 federal budget a mix of good and bad news for restaurant and bar operators, while the Canadian Federation of Independent Businesses characterized it as a relief and a worry.

The industry is pleased to see progress on trade liberalization and tourism funding, but surprised and disappointed by a two per cent increase in the excise tax on alcohol, which will cost consumers and licensees $470 million over the next five years, Restaurants Canada said in a news release.

“Alcohol is already an over-taxed commodity in Canada, so today’s increase is unwelcome news for licensees and their customers,” said Joyce Reynolds, Restaurants Canada’s executive vice-president of government affairs. “This increased federal tax, compounded by the myriad provincial taxes and liquor board markups, won’t help the hospitality industry grow jobs or the economy.”

The budget has some good news, the association said. It calls out an agreement that establishes a process for future trade liberalization in areas like interprovincial trade in alcoholic beverages – a key priority for Restaurants Canada.

It also includes $37.5 million of permanent funding for tourism marketing.

“Restaurants Canada looks forward to working with the federal government to grow the vibrant culinary sector, which is a key component of a successful tourism strategy,” Reynolds said.

The Canadian Federation of Independent Business (CFIB) said the budget is both a relief and a source of ongoing worry. The CFIB said small business owners will be relieved to learn there are no measures to raise taxes on capital gains or small business income in 2017 but should be concerned that several tax measures for independent businesses are under active review.

The biggest negative for entrepreneurs and employees is a projected three per cent increase in Employment Insurance (EI) rates in 2018. “The payroll budgets of every business and the take home pay for Canadian workers will now drop for six straight years, with an EI hike in 2018 and five years of CPP premium hikes starting in 2019,” Kelly said.

The CFIB pointed to what it sees as positive budget measures, including investments in skills building programs, a new procurement initiative to support innovative entrepreneurs, a review of measures to allow less costly transfers of businesses to family members and measures to make it faster and easier to employ foreign workers.

“We hope this will include a pathway to permanent residency for foreign workers with lower skills levels. In addition, we’re thrilled the government is considering changes to allow transfers of businesses to family members, recommended by CFIB and the subject of two recent private members’ bills from the Liberals and NDP,” Kelly said.

Read the full text of Federal Budget 2017: Building a Strong Middle Class.