Newfoundland's bad news budget is doubly bad for restaurants

With the restaurant industry already struggling because of the downturn in the provincial economy, foodservice operators in Newfoundland and Labrador were dealt a blow with today's provincial budget. Increases in HST and income tax rates will shrink disposable income, putting even more pressure on the province's restaurants and bars.

Also read, Higher wine taxes yet another hit to Ontario's restaurant industry.

"We are deeply disappointed that the government broke its promise not to raise the HST," said Joyce Reynolds, Executive Vice President, Government Affairs with Restaurants Canada. The province had previously vowed not to increase HST, but today's budget unveiled a 2% surge in the tax rate.

"That's twice the headache for restaurants, because the HST is not applied uniformly across all sectors," Reynolds said. "It discriminates against restaurants, where customers must pay HST, relative to grocery stores, where HST is not charged on many of the same or similar foods and beverages. It's going to take a bite out of restaurant sales at a time when many businesses are already scrambling to make ends meet."

The only bright note in the budget was the province's decision not to increase beverage alcohol taxes. Restaurants Canada gave Newfoundland and Labrador a grade of F, the lowest in the country, on their 2015 report Raise the Bar, which ranked provincial liquor policies across Canada.

Close to 7% of Newfoundland's workforce is employed in the restaurant industry, and $1 billion in annual sales are generated by restaurants in the province. The industry is the top source of first-time jobs for young people.

SOURCE Restaurants Canada