Tax break ends soon, hospitality sector urges government to make it permanent

As customers prepare for the end of the temporary tax holiday, did businesses see any real boosts? CTV’s Heather Senoran reports.

The federal government’s temporary GST/HST tax break is coming to an end Saturday but the hospitality industry says it should be a permanent program.

According to Restaurants Canada, Open Table reservations were up by around 23 per cent during the first two weeks of the break in mid-December, compared to the same time the previous year.

“As we head into what could be a pretty nasty trade war with the U.S., we’re going to need things in place to make sure that restaurant operators can continue to make meals affordable for people, because if they can’t, then those restaurants are going to close and we’re going to lose a lot of jobs in the sector,” said Kris Barnier with Restaurants Canada.

Barnier said in times of economic turmoil, dining out is often the first thing people cut out of their budgets.

He believes a permanent tax break is the only relief restaurants can pass on to customers.

“Unfortunately, as all our costs have gone up, there’s just nothing that restaurants can do to make those things more affordable. And when people ask, ‘Why is my hamburger so much more than it used to be a couple of years ago?’ It’s because the cost of running a restaurant continues to go up and up and up,” Barnier said.

Kitchener restaurant reacts

Staff at Kitchener’s Moose Winooski’s said they’ve noticed more customers in the last two months.

“A bit busier going into the afternoon for lunches and for dinners midweek,” said General Manager Joseph Siasat.

Those enjoying a late lunch there said they’ve noticed the break on their bills.

One Cambridge resident said it’s been a nice discount.

“Something is better than nothing. I think that’s where you’ve got to look at in today’s climate. It’s a good thing,” he said.

CFIB questions boost

The Canadian Federation of Independent Businesses (CFIB) said only 5 per cent of small businesses saw stronger sales compared to the same period last year. They said 15 per cent of those were in hospitality and only 4 per cent in retail.

The tax break also applies to things like children’s clothing and toys.

“By all accounts the government’s GST holiday was a flop for small businesses,” said Dan Kelly, CFIB president. “For many retailers it was an administrative nightmare to get point-of-sale machines compliant just before Christmas, let alone sort out which LEGO sets the holiday applied to, or how many items in a gift basket had to be tax-free for it to qualify.”

The CFIB also said that 66 per cent of businesses impacted by the tax break said their sales stayed the same but also added that they faced a number of challenges including reprogramming and additional administrative workload and training staff.

“The government should also provide affected businesses with a $1,000 credit in their GST/HST accounts to offset programming and administrative costs they incurred back in December,” Kelly suggested.

The tax break ends on February 15.