Restaurant owners in Ottawa are welcoming the federal government’s recently announced GST break, but a few anticipate some problems along the way.
Last week, the federal government announced it intends to implement a “GST holiday” on a slew of items from Dec. 14, 2024 to Feb. 15, 2025 as a way to support Canadian consumers. The tax break will apply to a number of goods and services, including children’s clothing and shoes, toys, diapers, restaurant meals, and beer and wine.
In Ottawa, Stephen Beckta, owner of Gezellig, Beckta Dining & Wine, and Play Food & Wine, says the tax holiday will stimulate activity during January, predicting sales at his establishments could jump as much as 20 per cent.
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“I think it’s going to impact restaurants in a very positive way during the normally quieter time in January and beginning of February and it’s going to really encourage people to use those gift cards that they might have gotten as a gift during the holidays,” Beckta said.
Anish Mehra, owner of East India Company Restaurants with two locations in the city, says he hopes the tax break acts as a new incentive to support restaurants, especially as the industry faces financial challenges.
“Between labour and food costs this last year, the margins keep getting thinner and thinner,” Mehra said.
On the down side, he said he’s already received calls from two holiday parties, asking to move their reservations to after the Dec. 14 start date.
“My fear is that it’ll create a lull in the first part of December and then just craziness in the later half of December,” Mehra said.
While the federal government has published a list of qualifying goods, there has been some confusion over what will actually qualify.
Dave Longbottom, owner of Flora Hall Brewing on Flora Street in downtown Ottawa, says he hopes information on what will qualify for the tax break will be made less ambiguous.
“I don’t want to get into a technical debate with a customer as to whether they should have an exemption or not,” Longbottom said.
For example, Longbottom says some of the confusion comes from the fact that alcoholic beverages with an alcohol by value (ABV) of seven per cent or lower will qualify, but that the exemption will also apply to any beverage dispensed at the place where it is sold.
“I’m not aware of any wine that’s under seven per cent (ABV), so I can just envision that there’ll be a certain amount of customer education and communication required. That really isn’t what I want to spend my time doing, or have my people spend their time doing,” he said.
While Beckta says there won’t be much to change needed to his point-of-sale system since the tax break will cover most of what he sells, Longbottom says the technicalities will make things a little more difficult at his bar.
“It’ll literally be a job for somebody at Flora and all businesses like Flora to go in on an item-by-item basis and modify the tax treatment,” Longbottom told OBJ.
Longbottom says he is weighing the pros and cons of the situation.
“I’m not all doom and gloom. I see that there’s potentially some upside. I’m just reflecting that there’s also an added burden,” he said.
Overall, Mehra says this sort of initiative is a step in the right direction.
“I hope it’s not the one and only recognition of what’s been going on in the hospitality industry. I’m hoping the federal government would try to address some of the other issues we’re facing or have some long-term measures … that gives people a little bit more disposable income or reduces the burden on restaurants on a day-to-day basis,” he said.
In a statement posted online, Restaurants Canada president and CEO Kelly Higginson said the announcement restores much-needed hope in the industry.
“The restaurant industry is doing worse today than at any time in recent history, including the pandemic,” Higginson said in the statement.
Higginson said 53 per cent of Canadian restaurants are operating at a loss or breaking even, more than since the beginning of the pandemic. She also stated that Restaurants Canada expects the tax holiday to result in a five per cent increase in sales for the average restaurant.
