As the break from federal and provincial sales taxes on certain items comes to an end this Saturday, two Ottawa restaurateurs are giving the initiative mixed reviews.
The federal government implemented a “GST holiday” on a list of items from Dec. 14 to Feb. 15 in a bid to support Canadian consumers during the holiday season. Some provinces, including Ontario, also chose to remove the sales tax. The tax break applied to various goods and services, including restaurant meals, beer and wine.
In November, OBJ spoke with Stephen Beckta, owner of Gezellig, Beckta Dining & Wine, and Play Food & Wine. At that time, he predicted that the tax holiday would cause his sales to jump by 20 per cent.
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On Friday, Beckta told OBJ that the tax holiday had lived up to his expectations.
“It’s never easy to identify with 100 per cent certainty why business goes up or down, but I feel like people have definitely been dining out a lot more often and allowing themselves to have something special at a restaurant during this HST holiday,” he said.
“Our sales, depending on the location, are up between 10 and 35 per cent during our quiet time in January,” he said.
Beckta also predicted last fall that interest in his curated wines would grow — a prediction that also came to fruition.
“We’re really pleased by the curated wine cases. We’re selling (them as part of our) wine club membership, which is also tax-free until Feb. 15. People are taking advantage of this time to stock up their wine cellars with really great, interesting wines that you can’t find at the LCBO,” Beckta said.
While some restaurateurs such as Beckta are seeing success, others like Amir Rahim, owner of Grounded Kitchen Coffee, say it’s just another day at the office.
Rahim said he was optimistic about the tax break when it was first announced, but increasingly found that the logistics made things difficult.
“I thought it was pretty cool but I found out suddenly that there were a lot of intricacies to the program. This qualifies and that doesn’t. As the days went by and some of the dust might have settled … it took the wind out of my sails,” Rahim said.
He added that he found reconfiguring the point-of-sale system “a little bit daunting.”
In the end, there was “no big difference” in sales, he said.
“If anything, my feedback from customers was often one of surprise. They forgot. It wasn’t a bunch of people heading out to spend more money because they’d be saving 13 per cent,” Rahim said.
Rahim added that the tax holiday generated less buzz than an internal promotion at his restaurant would.
“It’s kind of interesting because if I do an advertising campaign for, let’s say 10 per cent off brunch for one day only, we get pretty busy. There’s a good chance that we’ll see a peak in (sales and traffic) on that day. In this case, people were saving 13 per cent for (two) months. I would have thought that there would be a little bit more of a rush to get it, but I don’t think it made a difference,” he said.
Beckta also said he saw surprise from patrons who took the chance to enjoy an extra glass of wine.
“Through conversations with our guests, many of them are just happy to take advantage of this special tax relief during this period where they might not have had that extra glass of wine or come out for that special meal without it,” Beckta said.
Restaurants Canada recently urged the federal government to make something like the tax holiday more permanent. In a press release in January, Restaurants Canada CEO Kelly Higginson said that “53 per cent of restaurants are operating at a loss or barely breaking even. Restaurants Canada has been calling on governments to prioritize affordability measures, and the GST and HST holiday has done just that.”
She added that the tax holiday helped the industry in more ways than one, from offering workers more hours to increasing sales and traffic.
Beckta said he would welcome whatever the government wants to do to support the restaurant industry.
“It’s been a really tough time. Interest rates went up dramatically over the last couple of years. People start tightening their belts at what they consider splurges or special items, like going out or travelling. It would really make a huge difference in our industry if there was an opportunity for people to be able to dine out more often, without having to pay the tax,” Beckta said.
Rahim said he’s not sure how he feels about a permanent tax break and that the industry would need longer than the two-month window to see its true effects.
“It’s a federal program. It must have been billions (of dollars in sales tax) that was not collected. So when I think of it from that perspective, I’m kind of like, was it worth it?” Rahim said.
