GST ‘holiday’ too tasty to pass up

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This article was published 14/02/2025 (230 days ago), so information in it may no longer be current.

Tony Siwicki laughed when the federal government announced a two-month GST “holiday” on restaurant meals last December.

Soon, the owner of Silver Heights Restaurant at 2169 Portage Ave. realized it wasn’t a joking matter to his customers.

“They really noticed the GST line missing on their bills,” Siwicki said. “They loved that. They love not seeing it on their bill.

“At first, no one thought this would be anything. Five per cent? You’re laughing. We had a Christmas promotion where you buy a $100 gift card and you got another $20 back. That’s 20 per cent right there. Who was going to race through our doors for five per cent?”

The tax break expires Saturday.

Siwicki, who is chair of the Manitoba Restaurant & Foodservices Association, gives the Liberal government a chef’s kiss and hopes the tax break becomes a signature dish on the menu.

Restaurants Canada, which advocates for the food service industry, has called on Ottawa to make the tax break permanent or extend it until the Trump administration backs down on its tariff threats.

A report it released last week said it expects a $1.5-billion boost in sales over the 60-day period of the tax break.

“Simply put, the tax holiday is creating employment in communities across Canada and keeping people employed at a very challenging time,” said Kelly Higginson, president and CEO at Restaurants Canada. “Ending this tax relief now would directly hurt Canadian workers and families.”

Online reservation platform OpenTable reported an 18 per cent hike in the first two weeks of the tax holiday nationally compared to the previous year. That figure was up to 22 per cent in Manitoba.

Siwicki said the tax break put $20,000 more in his coffers.

“That’s half my payroll for two weeks,” Siwicki said. “It’s a month’s rent. It’s a month’s worth of protein. $20,000 is huge.”

Fifty-three per cent of restaurants across the country operate at a loss or just break even, Restaurants Canada data shows. That number was just 12 per cent pre-pandemic.

‘I keep saying that I’m tariff-ied’

The industry faces the threat of sweeping tariffs from the U.S.

“It’s a massive risk to our industry,” said Kris Barnier, Restaurant Canada’s vice-president for the central region, which includes Manitoba.

Polling data from August showed that the top two things people cut from their spending first during tough financial times are eating at a restaurant and ordering from them.

“Costs are going to go up, including food items, booze, packaging and cleaning items, and if people are losing their jobs and spending less on groceries, the first thing they’ll cut back on is restaurant spending,” Barnier said.

“It could hit our industry just as hard, if not harder, than some of those sectors such as auto and steel.”

Siwicki said he’s alarmed by the prospect of tariffs.

“A 25 per cent tariff will close restaurants,” he said. “I keep saying that I’m tariff-ied.”

The tariff threat arrived just as the restaurant industry was gaining momentum.

Restaurants Canada reported 67,500 additional jobs in the industry in January 2025 compared to the previous year, a 6.1 per cent jump compared to just two per cent in all industries.

Food services added 34,600 jobs since November 2024, reaching 1,175,900 jobs and representing one in six new jobs created in Canada.

Jay Kilgour, who owns Fionn MacCool’s Pub on Grant Avenue and is vice-chair of the Manitoba association, said December was the first month in the past few years in which he’s enjoyed his work.

Kilgour, who closed down his Reenders Square location last fall, said sales at his Grant Park location increased nine per cent over 2023. The GST was a big help.

“Businesses are getting hit hard, but people are getting hit just as hard with extra costs,” he said. “If we can make fewer barriers to this industry, the better it will be.”

On Friday, a spokesman for federal Small Business Minister Rechie Valdez said she met with Restaurants Canada reps this week, but stopped short of saying the GST holiday would be extended.

Retailers: ‘A lot of work for very little benefit’

In the retail sector, the GST holiday has largely been “a lot of work for very little benefit.”

“It came too late in the holiday shopping season and required too much work to ultimately see any net benefit,” said John Graham of the Retail Council of Canada.

Stores had to quickly changed their sales systems to accommodate the tax break. Once implemented, shoppers were confused about which items qualified for the GST break.

Some consumers delayed purchases until the tax break took effect, and some tried to return and re-buy items at the reduced rate. Anecdotally, sales didn’t get a major boost, Graham said.

In the week leading up Christmas, several Manitoba retailers — including Across the Board Game Café, Bison Books and Toad Hall Toys — told the Free Press they hadn’t noticed a difference in sales.

“Many customers just simply don’t look at GST and PST as part of their buying decision,” Graham said.

The tax holiday had a “neutral impact” in January, a slower period for sales, he said.

— with files from Gabrielle Piche

scott.billeck@freepress.mb.ca