Canada’s restaurant industry calls for permanent tax break on food

Almost one year after the Liberal government announced a nationwide tax holiday on food, among other items, some are calling to bring it back for good.

The call is coming from Restaurants Canada, which wants the levy to be slashed on both food in restaurants and at the grocery store.

President and CEO Kelly Higginson tells 1130 NewsRadio it would encourage more Canadians to eat out, at a time when affordability and cost-of-living is top of mind.

“We have done some significant polling for Canadians who also agree. Seventy-five per cent of them right now are saying they are eating out less because of the affordability crisis, and through our polling, over 80 per cent of people said they absolutely agree that there should be no tax on any food, of any kind.”

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Higginson says the tax break from December 2024 until February 2025 helped bolster an industry that’s been trying to make ends meet for years.

“It was wildly successful. We saw an 8.6 per cent increase in spending. This is, we have to remember, during the slowest time of the year — January and February. We actually grew 24,000 foodservice jobs during the slowest period of the year when we’re usually shutting jobs, cutting shifts — we’re laying people off. With that, we were able to model out that this is something that’s going to stimulate local economies.”

Higginson says it would help create jobs for young people at a time when youth unemployment rates in Canada are rising.

“We know it will make a difference,” said Higginson.

“Currently, of our workforce of 1.2 million people that we employ, 40 per cent of those are youth. We know for sure this would create possibly upwards of 25,000 new jobs for youth from removing the GST.”

Restaurants Canada says the industry never recovered from closure regulations during the height of the COVID-19 pandemic.

“The inflationary pressures have hit our sector, just as much as they’ve hit Canadians.”

Higginson stresses that if the tax break comes back, it would pave the way for restaurants to open, as many currently face deep debt.

“We heard from our operators that they really felt the difference in the profitability and the viability being more sustainable through those winter months. We’ve got over 40 per cent of our operators saying they’re barely breaking even or operating at a loss. Pre-pandemic, that was 12 per cent.”

The call would only apply to food, not liquor sales.

Higginson acknowledged that calling for a tax break at a time the economy is limping along could be controversial.

“I think it’s absolutely the time. Canadians have been struggling with affordability for a number of years now, and we have to take a look at the tax burden that Canadians are carrying and how that’s impacting the quality of their day-to-day life.”

She admits her organization has been actively lobbying the federal government for months to bring it back, but hasn’t had any indication that it will happen anytime soon.

The federal government is set to table its economic update in November, but Higginson says she’s being realistic in hoping there’s room for the tax break in the spring budget.

Payment system provider Moneris released a report in February, casting doubt on whether there were any actual economic benefits during the break. It tracked numbers during the first half of the break and discovered a slight decline in overall spending, transaction count and transaction size compared to the same time in 2023.