Canadian restaurant advocacy group calls for end to GST on food purchases

A national restaurant advocacy group, Restaurants Canada, is calling for the next government to end GST on food purchases. 

By doing so, they say that whoever wins the upcoming election can effectively protect the 1.2 million foodservice workers in Canada as well as help improve affordability for all Canadians.

In the recent GST/HST holiday implemented over the holidays, food became more affordable, and more Canadians were able and willing to eat out more which helped support the restaurant sector in some of the slowest months. 

This is supported by recent Statistics Canada data which shows that this January, commercial foodservice sales saw a 7.5% increase, year-over-year. 

Additionally, StatCan findings show that in January, there was a 67,500 year-over-year increase in foodservice jobs across Canada. 

Restaurants Canada would like to see this happen again, but on a more permanent basis. 

According to a poll conducted by the restaurant advocacy organization, 77% of Canadians would like to see a permanent GST holiday on food, and 84% said they did not believe food should be taxed. 

“Restaurants are the number one source of first-time jobs and the fourth largest private-sector employer in Canada,” said Kelly Higginson, President and CEO of Restaurants Canada. 

“A million dollars in sales in our sector generates $1.8 million in output in the wider economy and 17.6 [million] jobs, both above the average for other industries. There is real opportunity here for the next government to invest in a major driver of the Canadian and local economies, protect jobs and help make life more affordable for Canadians.”

In the current state of the economy, running a restaurant has become increasingly hard. 

Restaurants Canada says that restaurants and their employees pay around $26 billion in federal, provincial and municipal taxes and contribute 4% of the national GDP. 

However, 53% of foodservice businesses say they are operating at a loss or just breaking even. This is up from 12% pre-pandemic. 

Additionally, restaurants shutting down and going bankrupt have increased by 45% in the first eight months of 2024 compared to the same period in 2023.

“2024 was a tough year for restaurants, with consumer spending down due to the affordability crisis impacting Canadians across the country, while every operating cost was going up,” said Higginson. 

“The GST/HST holiday was a much-needed boost, but we need permanent measures to address affordability for Canadians and allow our industry to continue to be a major contributor to the Canadian economy, especially as we face the new threat of US tariffs.”

In addition to recommending a permanent GST holiday on food sales, Restaurants Canada says they have made recommendations to all major federal parties which include reducing interprovincial trade barriers and reducing payroll taxes.