Business down as PST changes come in
Saskatchewan was one of only two Canadian provinces posting a decline in food and drinking place sales from July 2016 to July 2017.
With Canada 150 celebrations taking place across the country bringing in increased tourism, sales increased up to 5.9 per cent (Quebec) in July, but Saskatchewan saw a 1.2-per-cent reduction. Nova Scotia saw the biggest hit with a 2.2-per-cent drop in sales.
Across Canada, sales at food service spots and drinking places were 4.8 per cent higher in July 2017 than they were in July 2016.
Saskatchewan also saw a 1.3-percent sales drop-off from June to July this year.
Mark von Schellwitz, Western Canada vice-president of Restaurants Canada, said venues selling food and drink in Saskatchewan are “certainly feeling the pinch from this punitive tax policy which picks winners and losers in the food industry.”
Von Schellwitz is referencing the Saskatchewan Party government’s adding the now six-per-cent PST to restaurant beverages and meals. The change was announced in the March budget before coming into force in July.
“The new six per cent on restaurant meals is certainly having an effect on their sales and their customers aren’t very happy with it, either,” he says.
Stats from a Restaurants Canada survey partially back up what he is saying.
While only four per cent of respondents say the new tax is hurting business, 73 per cent have been forced to reduce employee hours, 50 per cent are laying off staff and 28 per cent are reducing operating hours.
The survey also reports 90 per cent of restaurant owners claiming they have had customers complain about the new tax.
“That six per cent makes a difference,” he said, adding that putting the “punitive tax” in place at a time when the province’s economy was already struggling was the “worst timing.”
He said members are “hoping that the government will come and help them in some other ways.”
The province said in a statement, “Some budget decisions were difficult, but these initiatives begin to shift the revenue base away from its over-reliance on non-renewable resource revenues, while also modernizing and simplifying the tax system and ensuring taxes remain fair and competitive.”
It notes that the Sask. Party government kept a PST exemption on restaurant meals, as well as prepared meals and snack food, for nine years.
Restaurants Canada suggests the province look at implementing a liquor server wage (essentially a lower minimum wage for those serving liquor), providing help for campaigns promoting restaurants and changes to how restaurants and bars purchase liquor.
But even if that change comes, van Schellwitz said “there are permanent sales declines that happen as a result of this.”
Members agree, with 74 per cent saying the negative impact on sales will be permanent.
Another Restaurants Canada request is that the province consider the notion that “food should be food” and taxed equally.
On this point, he is drawing a line between the new sales tax being applied to restaurant meals, but not those that are bought at grocery stores.