Editorial: HST fears.
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Updated: December 29, 2009 10:03 PM
The introduction of the HST to restaurant meals is still six months away, but that hasn’t prevented dire predictions about the effect the tax will have on the industry.
Statistics regarding the food service industry report restaurant sales down by 5.6 per cent from 2008. Apparently high end restaurants bore the brunt of this customer drop off.
“It’s going to have a huge impact,” said Canadian Restaurant and Foodservices Association Western Canadian Vice President Mark von Schellwitz, of the impending 12 per cent HST. There is currently five per cent GST on food and 10 per cent on alcohol in restaurant transactions.
Closer to home, similar trends are at work.
Servers in the hospitality industry in the South Okanagan - Similkameen report tip revenues down this year, and the streets in our communities seem to be a lot quieter - and devoid of consumers - a lot more often this year.
Restaurant meals are one of the first things that those on a restricted budget can cut back on. The fact that servers’ tips are being cut back now would seem to indicate that the breaking point for many budgets is being reached. Add another seven per cent to the bill and that may mean the breaking point for many patrons.
“The worst year for the industry was 1991, when the GST was implemented,” Schellwitz noted, “anybody who went through 1991 knows how much impact the tax will have, and operators are very scared.”
The South Okanagan - Similkameen is highly dependent on tourism and the foodservice industry. This region can ill afford the prospect of yet another round of failed operations in an industry already under intense pressure from other factors.
The province has seen the error of its ways and made exceptions to the real estate industry for the HST. It’s time to do the same for the restaurant industry.
