TORONTO — As Liberal leader Michael Ignatieff incites internal party debate over his support of the Harmonized Sales Tax (HST), while Parliament prepares to introduce legislation to implement it in Ontario and B.C., the restaurant industry continues to fight against the levy, citing the adverse effects it will have on the $60-billion foodservice industry.
In a recent letter to parliament, speaking on behalf of more than 12,000 caterers and restaurant and bar operators in B.C., the Canadian Restaurant and Foodservices Association’s (CRFA) president and CEO, Garth Whyte, urged the government to instill solutions to the problems HST will pose to the industry. “The province of B.C. has always taxed food fairly, but sales tax harmonization requires a new seven per cent tax on restaurant meals,” he said. “In a recent survey of our members in British Columbia, 91 per cent said a harmonized sales tax will have a negative impact on their business.”
The CRFA estimates that the added tax will lead to a $750 million drop in restaurant sales in B.C. per year and an average loss of $50,000 a year at an average restaurant. “In 1991, when GST was introduced, real foodservice industry sales dropped by 10.6 per cent and average unit volume declined by 22.7 per cent. An Ernst and Young report attributed 75 per cent of the sales decline to the impact of the GST,” Whyte rationalized in his letter.
HST is expected to take effect in B.C. and Ontario July 1; the tax will total 12 per cent and 13 per cent in each province respectively.