Ontario Restaurant Hotel & Motel Association

Ontario Restaurant Hotel & Motel Association

May 15, 2006 12:49 ET

McGuinty Government Plans New Tax on Hospitality Industry

Attention: Business/Financial Editor, City Editor, Food/Beverage Editor, Travel/Tourism Editor, Government/Political Affairs Editor TORONTO, ON --(CCNMatthews - May 15, 2006) - Premier Dalton McGuinty and his provincial government are poised to allow a new retail sales tax on liquor to be passed on to the hospitality industry. Bill 53 - the new City of Toronto Act - which is currently in its final review stages, will permit the City of Toronto to levy a direct retail sales tax on customers' purchases of liquor in Toronto's restaurants and bars, adding a fourth tax line to customers' bills. If allowed to go forward, other Ontario municipalities may be in line to get a similar power when the Municipal Act comes under review next.

Customers currently pay GST on food and liquor, 8% PST on food, and 10% PST on liquor. This proposed new taxing authority would add a fourth tax line to a patron's bill, undoubtedly resulting in reduced sales for the hospitality industry.

"The industry simply cannot sustain another tax", said Terry Mundell, President and CEO of the Ontario Restaurant Hotel & Motel Association. "Our sales lag significantly behind the rest of Canada and our profit margins are razor-thin and among the lowest in the country. Another tax will decimate our industry with many operators simply closing their doors and walking away."

Ontario's full service restaurants have profits of just 1.9% compared to 5.9% in 2001, while the bar, tavern and nightclub sector's margins have plummeted from 6.5% to 0.9%.

As the Standing Committee on General Government, a sub-committee of the Legislature, enters into the final stages of consideration of Bill 53 the ORHMA is urging committee members to amend the legislation by removing the liquor tax provision.

"As the government nears the end of debate on this legislation we are calling on the Premier and his government to stand up for Toronto's hospitality industry - more than 4,100 establishments with a liquor license, largely small business and 63% independently owned and operated - and remove the liquor tax provision from Bill 53."

Ontario's hospitality industry generates $18.32 billion in annual sales, and directly employs more than 415,000 Ontarians. In the City of Toronto alone there are more than 8,000 restaurants, of which more than 4,100 are licensed to sell and serve liquor.

The ORHMA is Canada's largest provincial hospitality industry association, with more than 4,100 members representing 11,000 businesses.
/For further information: For more information please contact Sonia Richards, Executive Assistant, Ontario Restaurant Hotel & Motel Association at 905-361-0268/1-800-668-8906 ext.322/ IN: FINANCE, FOOD, POLITICS

Contact Information

  • Sonia Richards, Executive Assistant, Ontario Restaurant Hotel & Motel Association
    Primary Phone: 905-361-0268 ext. 322
    Toll-Free: 800-668-8906