FOR IMMEDIATE RELEASE
December 14, 2007

TORONTO -- The Canadian Restaurant and Foodservices Association (CRFA) welcomes business tax relief announced in the Dec. 13 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.

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