Nova Scotia

Restaurants enjoying extra business during tax break, worry about looming end

Restaurateurs in the Halifax area say the two-month GST holiday that began last month appears to be working, but some are worried about the public's reception when it comes to an end.

Industry to make an extra $60 million during GST holiday in Nova Scotia, says Restaurants Canada

A man cleans the counter of a bar.
Andre Pratt, co-owner of Studio East Asian Gastropub in Halifax, said the tax break has been a 'tremendous help.' (Preston Mulligan/CBC)

Restaurateurs in the Halifax area say the two-month GST holiday that began last month appears to be providing a boost to their businesses, but some are worried about the public's reception when it comes to an end.

The federal government passed legislation in November to remove the federal sales tax for two months from a range of items, including restaurant meals and takeout, beer and wine sales, and children's toys and books.

The pause, intended as a way to help the industry and give Canadians a break during the holidays and early part of the new year, started on Dec. 14 and remains in effect until Feb. 15.

"I think it's been a tremendous help since it started," said Andre Pratt, co-owner of Studio East Asian Gastropub on Agricola Street in Halifax.

Pratt said the business has particularly noticed an uptick on some weekdays that have traditionally been less busy, "which is really nice because we know oftentimes the weekends are easier to fill up."

Pratt and his business partner moved in 2024 from a location on Cunard Street to lease a larger space on Agricola. The GST holiday has been a welcome shot in the arm to keep their new space going during the usually slow months of January, February and March.

"I know even for myself, I've been going out a lot more trying new restaurants while I can, while I get this little tax break because you are saving quite a bit of money," said Pratt.

"It is a costly thing nowadays. You go out and you're spending quite a bit of money and the tax break is helping a lot."

An extra $60 million

Restaurants Canada says those in the industry in Nova Scotia stand to earn an extra $60 million during the two-month holiday.

The group estimates a typical couple on an outing will save $15 on a $100 bill, which they'll end up spending on an extra drink or a dessert.

"Or maybe an appetizer that you normally would have gone without," said Janick Cormier, Atlantic vice-president at Restaurants Canada.

"That's going to stay in the establishment itself and not go to government revenues. So that's how the calculation was made. We believe it's a very conservative estimate."

Restaurants Canada says dining out is a key economic driver for Nova Scotia, generating $2.7 billion in sales, nearly 40,000 direct and indirect jobs, and supporting tourism. The tax break, it said, offers relief from the economic pressures, inflation and increased operational costs that make profit margins so thin for those in the business.

"We're still waiting on the hard data," Cormier said. "But anecdotally, what we're hearing is reservations are up and they're also bigger reservations or larger parties than we would normally see this time of year, which means people are going out and they're bringing friends and family along."

Worries about end of tax break

Joanne McCullough, owner of the Millstone Public House restaurants, said she's seen a spike in business too. She said receipts in December were about eight per cent higher compared to the same time in 2023.

But she's not yet convinced the GST holiday is the reason.

"It doesn't draw people in necessarily or make them spend more money or buy more appetizers or maybe an extra drink. But at the end of the meal, they're like, 'Oh, that's a nice bonus.' So that's good."

Woman sits in front of a bar.
Joanne McCullough, owner of the Millstone Public House, worries about what will happen when the tax break ends. (Preston Mulligan/CBC)

McCullough and her husband own four restaurants under the Millstone brand, with another planned for the Baker Drive area of Dartmouth. But she worries about what will happen when the tax break ends in mid-February.

"I think that people are getting used to the experience of not having tax on their restaurant bill," McCullough said. "So when we have to put it back on, they might feel like our prices have gone up, which we haven't. We won't adjust our prices at all. It just will feel that way."

Restaurants Canada is lobbying for the government to make the holiday permanent and provide further help to businesses still recovering from the COVID-19 pandemic.

"For us, food is food, whether it comes from a grocery store or takeout counter or a restaurant," Cormier said. "Taxing food and making it more expensive is bad public policy. So we would really like for this GST break to be made permanent so that the industry can flourish after a few years of hardship."

McCullough said that would be a welcome policy change.

"That little bit does make a difference. Like I said, at the end of the meal, it's just a little bit easier to swallow. And that's always a good thing as we're trying to get everything moving again."

ABOUT THE AUTHOR

Preston Mulligan has been a reporter in the Maritimes for more than 20 years. Along with his reporting gig, he also hosts CBC Radio's Sunday phone-in show, Maritime Connection.

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