Aha’s thoughts on the federal government's GST holiday

On November 21, 2024, the Canadian federal government announced their plans for a two-month Goods and Services Tax (GST) holiday on restaurant meals, effective from December 14 to February 15, 2025. This initiative aims to provide financial relief to both consumers and the struggling restaurant industry. During the specified two-month period,  GST will not be charged on restaurant meals. This temporary exemption aims to encourage consumers to dine out during a traditionally slow period for restaurants.

While well-intentioned, the Alberta Hospitality Association is skeptical about the true impact of the GST holiday on the bottom lines of restaurant owners and operators. We believe the administrative burden this initiative will have may outweigh the benefits, particularly given its short-term impact. A 5% reduction in bills is unlikely to significantly influence consumer spending habits or generate meaningful growth in revenue.

The restaurant sector has endured extraordinary challenges in recent years, including the COVID-19 pandemic and skyrocketing operational costs. According to Restaurants Canada, more than half (53%) of restaurant businesses are currently operating at a loss or merely breaking even, a staggering increase from just 12% pre-pandemic. Contributing factors include reduced consumer spending and the rising cost of living. In light of these challenges, what the industry needs now are impactful, lasting policies that deliver real relief to business owners to help stabilize the sector.

The Alberta Hospitality Association continues to urge the federal government to adopt measures that will have a sustained and meaningful impact on the industry, addressing the root causes of its ongoing struggles and ensuring its long-term viability.