Restaurants want in on PST break

The lure of ready-made meals may soon come with a tax break, but Manitoba’s restaurant industry worries that shift could steer customers away from their tables.

The Manitoba Restaurant & Foodservices Association says the removal of provincial sales tax from groceries, effective July 1, could take a bite out of restaurant sales.

The province announced Tuesday it will remove PST from products such as rotisserie chicken, prepared sandwiches and fruit trays, and beverages — including carbonated drinks, fruit juice and dealcoholized beer and wine.

Shaun Jeffrey, president of the association, welcomed the tax break, calling it one of the few ways the province can influence grocery prices.

However, he said restaurant takeout and quick-service meals will still be subject to the PST. He said he hopes the province will also exempt takeout items and quick-service restaurants, such as fast-food establishments.

“Takeout is 25 per cent of our revenue, and (quick-service restaurants) is 38 per cent,” Jeffrey said.

“It would be a significant loss to our economy. For every dollar that the restaurant industry brings in, we put in $2.30 into the economy, which is the most of any industry.”

He said by comparison, a dollar spent in the grocery industry generates about $1.60 to the economy, and the restaurant sector employs four times as many people in Manitoba as its grocery counterpart.

To underscore the effect of the budget item on consumers, Premier Wab Kinew and members of his caucus held a news conference at the Grant Park Co-op on Wednesday.

“The budget that we brought in is about fairness,” Kinew said. “And what we mean by fairness is giving help to the people who need help the most, including your family.”

Kinew said everyone relies on grocery stores, regardless of their income.

“So saving money, saving money for your family, on all food and drinks from the grocery store, that’s a way to help everybody,” Kinew said.

“It would be a significant loss to our economy. For every dollar that the restaurant industry brings in, we put in $2.30 into the economy, which is the most of any industry.”

In terms of the restaurant industry’s concern that the playing field isn’t level, Kinew said: “We love the restaurant industry. They do great work. A lot of low-income Manitobans can’t go out to eat, but they’re still going to go to the store.”

Data from the federal government’s five per cent GST break from Dec. 14, 2024 to Feb. 15, 2025 shows that 80 per cent of Generation Z and 74 per cent of Millennials were more willing to dine out because of the tax break, while at least 50 per cent of all age groups said the same.

“You’d see a boost of growth in our industry and a return into the economy,” Jeffrey said. “It’s just a win-win for everybody to relate that same PST forgiveness on takeout meals that you’d be giving to grocery stores for the same takeout meals.”

Currently, PST isn’t charged on milk, fruit, vegetables or meat.

The government’s decision is expected to save families up to $100 annually and cost the treasury $24 million.

Roughly 10 per cent of items people buy in a given week are subject to PST, said John Graham of the Retail Council of Canada on Tuesday.

He estimated the tax cut will affect about one-third of those items. He said 83 per cent to 93 per cent of grocery store products won’t be subject to the provincial tax.

In Manitoba, food inflation rose 5.9 per from December 2024 to the same month in 2025. It was the second-highest inflation rate across the country, Statistics Canada data show.

The PST break doesn’t apply to some smaller, independent shops and convenience stores. The exemption won’t extend to businesses that are smaller than 280 square metres, or 3,013 square feet, and those that are licensed to sell tobacco products.

“We should be driving Manitobans to local businesses, supporting them, offering them the supports that they need.”

Tory Leader Obby Khan said the premier is picking “winners and losers” when it comes to the exemption.

“This is the premier picking … millionaires and billionaires who own these grocery chains to have a PST exemption and drive more business to them,” Khan said. “We should be driving Manitobans to local businesses, supporting them, offering them the supports that they need.”

Kinew sidestepped questions about the issue during his news conference. Instead, he said experts point to the PST break as being a real way to help out. He didn’t name the experts.

“At the end of the day, people are starving to save money at the grocery store. Everybody’s fed up seeing the cost of living going up and up and up.”

scott.billeck@freepress.mb.ca