TORONTO, Oct. 31 /CNW/ - The Canadian Restaurant and Foodservices
Association welcomes the broad-based tax relief announced in yesterday's
economic statement by federal Finance Minister Jim Flaherty.
The GST cut effective Jan. 1, 2008 will mitigate the damage this flawed
tax continues to inflict on Canada's restaurant operators. The GST is applied
to food sold from restaurants, while identical or similar products sold by
grocery stores are GST exempt.
"A reduction in the GST is a step toward fixing the flaw in the GST that
results in the same or similar food being taxed differently, depending on
where it is purchased," says Joyce Reynolds, CRFA Executive Vice President of
Government Affairs. "A carton of milk sold in a cafeteria is subject to GST,
but the same product sold at a grocery store is tax-free."
Harmonizing the GST with provincial sales taxes would make the situation
even worse, by creating a new supertax that would wipe out provincial sales
tax exemptions on restaurant meals in British Columbia and Saskatchewan, and
on meals under $4.00 in Ontario.
"Tax harmonization would shift a significant tax burden onto consumers,
who would pay more for a wide range of goods and services, from children's
clothing and restaurant meals to snow removal and haircuts," says Reynolds.
"We are pleased the government has instead opted to provide Canadians in every
region of the country with broad-based tax relief."
Retroactive personal income tax cuts, particularly those directed at low
income Canadians through an increase in the personal income tax exemption, are
welcome because they reduce the penalties for working.
Much-needed business tax cuts will help restaurant operators who are
being squeezed by mandated labour cost increases, rising food costs, and
lacklustre sales in many areas of the country due in part to the dramatic
decrease in visitors to Canada. The average profit margin in the foodservice
industry is just 3.8% of operating revenue, according to Statistics Canada.
For further information:
For further information: Joyce Reynolds, Executive Vice President,
Government Affairs, (416) 649-4219; Jill Holroyd, Vice President, Research and
Communications, (416) 649-4217