Restaurant industry welcomes Ontario tax relief

    TORONTO, Dec. 14 /CNW/ - The Canadian Restaurant and Foodservices
Association (CRFA) welcomes business tax relief announced in yesterday's
economic statement by Ontario Finance Minister Dwight Duncan.
    Much-needed business tax cuts will help restaurant operators who are
being squeezed by mandated labour cost increases, rising food costs, and
lacklustre sales due in part to the dramatic decrease in visitors to Ontario.
The average pre-tax profit margin in the Ontario foodservice industry is just
2.9% of operating revenue, according to Statistics Canada.

    Business tax relief in the economic statement includes:

    -   Increasing the small business deduction threshold to $500,000 from
        $400,000 retroactive to Jan. 1, 2007
    -   Cutting capital tax rates for all businesses by 21 per cent,
        retroactive to Jan. 1, 2007.

    The economic statement made no mention of harmonizing the GST with the
provincial sales tax - a plan that would create a new supertax that would wipe
out provincial sales tax exemptions on many goods and services, including
meals under $4.00 in Ontario.
    Tax harmonization would cost Ontario consumers $5 billion a year in new
taxes, according to a recent research report.
    "We are delighted that Minister Duncan resisted calls from the federal
government to harmonize the GST and PST," says Elaine Flis, CRFA's Ontario
Vice President. "Tax harmonization would shift a significant tax burden onto
consumers. Items such as your morning coffee and a muffin would be subject to
an extra 8 per cent tax."
    When the GST was introduced in 1991, it increased the bill for food
purchased at a restaurant by 7 per cent overnight, while similar or identical
foods purchased at grocery stores remained tax exempt. Restaurant sales
dropped by a record 10.6 per cent that year and 42,000 foodservice jobs were
lost across Canada.

For further information:

For further information: Elaine Flis, CRFA Vice President, Ontario,
(416) 649-4243; Jill Holroyd, CRFA Vice President, Research and
Communications, (416) 649-4217

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