‘Unjust and downright silly’

The exasperated co-owner of a Portage Avenue bakery said he’s considering putting pop and chips in the window and changing its name to become eligible for the seven per cent PST exemption on all grocery items that takes effect July 1.

“What if we change our name to ‘Hildegard’s Convenience Store’ and put out some chips and pop for sale, maybe add some cigarettes and vapes behind the counter?” asked Hildegard’s Bakery co-owner Dave Newsom.

“Would that make us deserving enough of this giveaway?”

That’s a question Newsom said he’s asked the provincial government about the change, which is part of its promise to make life more affordable. Its new budget legislation includes the removal of the PST from all food sold at grocery and convenience stores — but not at bakeries.

As of Canada Day, baked goods such as cakes, muffins, cookies and doughnuts — when sold as a single serving or in quantities of less than six — will no longer be taxable at grocery and convenience stores.

However, the seven per cent tax will still apply at bakeries.

“I believe any reasonable person will agree this outcome is unjust and downright silly.”

That means a package of four cookies purchased at 7-Eleven won’t be taxed, but the same-sized package of cookies from Hildegard’s Bakery will be subject to tax.

“I believe any reasonable person will agree this outcome is unjust and downright silly.”

Newsom said Wednesday he’s rallying bakery owners across Manitoba, and Canada, to speak out against it.

Manitoba decided not to remove the PST from takeout food sold by restaurants and food-service providers such as bakeries, food courts, coffee shops, cafeterias, concession stands, food trucks, and similar operators.

While Hildegard’s has a few tables for sit-down customers “it’s insignificant in terms of sales,” Newsom said. “Mostly we bake bread.”

He’s been in touch with the provincial government, and shared email responses he received that show understanding but don’t back down from keeping the tax on items sold at a bakery.

“I appreciate that from your business’s perspective, the outcome may appear inconsistent — particularly where similar products may be treated differently depending on where they are sold,” said one finance department email.

It cited the Retail Sales Tax Act that considers bakeries as food-service providers such as restaurants that must continue to collect the seven per cent tax, while convenience and grocery stores do not. “As a result, bakeries are excluded from the expanded exemption, and their food and beverage sales remain subject to (the tax),” the bureaucrat wrote.

“The problem is the legislation is bad, but it says what it says,” Newsom said. “I am concerned that fixing this will require legislative changes which would require the legislature to be sitting.”

The legislative session is in summer recess and doesn’t resume until Sept. 29.

The Baking Association of Canada is also speaking up, said Newsom. The national association that advocates on behalf of professional bakers on issues such as food safety, sustainable practices, taxation, and regulations was not prepared to comment by Wednesday’s deadline.

Restaurants Canada has also complained to the province about the PST exemption not including prepared takeout meals from restaurants.

The national organization has been asking for a meeting with Premier Wab Kinew since before the legislation passed on June 1, and is still waiting, spokesperson Milena Stanoeva said Wednesday.

Finance Minister Adrien Sala said in a prepared statement Wednesday the government has met with Restaurants Canada and will continue to listen to its feedback.

“We know Manitobans are feeling cost pressures every day, and this removing the PST on groceries will provide the most immediate savings,” said Sala, who was not made available for an interview.

“Our government is focused on where we can make the biggest difference for Manitobans — at the grocery store checkout. Removing the PST from groceries means savings every time families shop,” he said.

When Manitoba’s legislation was introduced, it included a PST exemption on snacks, pop and prepared meals sold at large grocery stores. It was later expanded to include convenience stores and smaller grocers such as Food Fare after “everybody complained,” said Food Fare co-owner Munther Zeid.

“The government opened up a can of worms.”

“I brought up the concern going, ‘OK, so you’re only allowing the bigger stores? So you’re basically asking all the people to dump all the small stores and concentrate on the big stores because they’re going to be PST exempt?’” Zeid said Wednesday.

“The government opened up a can of worms.” He said it may not be fair that bakeries and restaurants are not included in the PST exemption “but where do you draw the line?”

“Tomorrow, it could be Canadian Tire going, ‘We sell groceries. Can we be PST exempt, too?’” Zeid said.

Under the original rules announced by the government in March, small urban convenience stores that sell cigarettes were still required to charge the PST. Earlier this month, the regulatory bulletin was updated to include all convenience stores.

carol.sanders@freepress.mb.ca