Restaurants Canada pushes for the tax break to become a permanent policy despite mixed local response.
Olivia Taylor
Kicker
While Restaurants Canada lobbies to make a federal restaurant tax holiday permanent, some Newfoundland restaurant owners say the program has failed to boost business or change consumer behavior.
The federal government implemented the HST/GST tax holiday in December to help Canadians save money around the holiday shopping and entertaining season. The tax holiday exempted items such as groceries, restaurant meals, children’s clothing and gifts from both federal and provincial sales taxes from Dec. 14 through February 15.
Local eateries were hopeful the tax savings would be a boost to their businesses. With only a few days until the tax holiday is set to expire, Restaurants Canada, a trade association and industry advocacy group representing restaurants and food service providers, is advocating for this break on federal taxes to be made permanent.
Yet, some Newfoundland restaurant owners and food industry workers say the tax break made little or no difference.
For consumers like Mike Lee – who’s eaten at restaurants more often since Dec. 14 – the tax holiday’s future may impact his dining out habits.
“When you take the tax off, that covers your tip,” Lee said.
While the tax holiday had an impact on Lee’s dining habits, has the tax break encouraged other consumers to do the same?
Fabian Power, owner of three Old Town Pizza locations on the Avalon, thinks not. A phrase he often heard while checking customers out was, “Oh, there’s no tax on that is there? I forgot about that.”
Power has seen no meaningful increase in customers since the tax break took effect in December. He also said he’s spoken to five of his peers in the food industry who share his opinion.
Some restaurant owners faced unexpected cash flow challenges due to the temporary HST break, according to Power. While the tax relief benefited customers, it created financial complications for certain restaurants, particularly those who pay HST monthly.
In practice, while restaurants are supposed to set aside HST funds for government payments, they sometimes use this money for immediate needs such as supplies or payroll. They ultimately pay the taxes to the government as required.
This factor became especially problematic between December 14 and 31, when restaurants weren’t collecting HST from customers but still had to meet their tax obligations. Some restaurant owners found themselves in a tight spot, having already spent money that would normally be replenished through ongoing HST collection.
For restaurants such as Swiss Chalet, the festive season is typically very busy. But Jilian Hedges, a supervisor at Swiss Chalet’s Mount Pearl location, observed no real change in customer volume or sales.
“The tax break for us started in the middle of our busiest season anyway,” Hedges said. “I didn’t notice a huge increase. Since then, I haven’t noticed anything overly different from last year.”
Data cited by Restaurants Canada tells a story different from what some people in the Newfoundland restaurant industry are experiencing.
Janick Cormier, the vice-president of Restaurants Canada (Atlantic), cited data suggesting the tax holiday has benefited food industries overall in the Atlantic provinces.
The data, compiled by OpenTable, an online restaurant-reservation service company, suggests there has been an eight per cent increase in reservations in Atlantic Canada year over year.
Cormier also suggests the tax break led to more jobs nationally: “There were 67,500 more jobs in the industry in January 2025 than there were in January 2024, a 6.1 per cent increase compared to just two per cent across all industries.”
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