Restaurants Thrive as GST/HST Tax Break Comes to an End
The temporary GST/HST tax break, which provided relief to Ontarians on a range of goods and services, is set to expire at midnight on February 15. The two-month initiative, which allowed consumers to save up to 13% in taxes, has drawn mixed reactions from businesses and consumers alike.
While some businesses reported minimal gains and logistical challenges, the restaurant industry emerged as a clear beneficiary, with sales and job growth seeing a significant boost.
The tax break, introduced to stimulate consumer spending during a period of economic uncertainty, required retailers to adjust their payment systems and inventory to accommodate the temporary tax exemption. However, retail analyst Bruce Winder described the initiative as underwhelming for many businesses.
According to the Canadian Federation of Independent Business (CFIB), only about 5% of small businesses reported stronger sales compared to the same period last year.
In contrast, the restaurant industry experienced a notable uptick in activity. Transactions surged by 7.6%, driven by millions of Canadians dining out to take advantage of the tax-free meals.
The initiative reportedly created 34,000 jobs and generated an additional $1.5 billion in sales for the sector. Restaurants Canada is now urging the federal government to extend the tax holiday or eliminate GST on prepared foods and restaurant meals permanently.
Until midnight on February 15, consumers can still save on taxes for a variety of items, including:
- Restaurant meals and prepared foods
- Snacks, beer, wine, and cider
- Children’s clothing, footwear, diapers, and car seats
- Select toys, games, and dolls
Meanwhile, some businesses are worried about potential penalties for errors made during the rushed implementation of the tax break. The CFIB is calling on the Canada Revenue Agency (CRA) to show leniency, given the challenges businesses faced in adapting to the program.
As the GST/HST tax break comes to an end, its legacy remains a topic of debate, with some industries hoping for its return and others relieved to see it go.