Budget sparks mixed feelings amongst Canadian restaurants and bars

April 03 2017

The recent federal budget was a mixed bag of good and bad news for Canadian restaurant and bar operators.

Reasons to smile included progress on trade liberalization with the budget calling out an agreement that establishes a process for future trade liberalization in areas like interprovincial trade in alcoholic beverages.

Meanwhile, $37.5 million of permanent funding is to be set aside for tourism marketing.

Alcohol on the up

However, on the downside, a proposed two per cent increase in the excise tax on alcohol is expected to hit licensees to the tune of $470 million between now and 2022. This rate will increase annually along with the Consumer Price Index.

Although excise levies are paid by manufacturers and importers and imposed at the time of production or importation, the proposed hike will have a knock-on effect for restaurants and bars, adding to the total cost of alcohol.

This could range from anything as low as a penny for a bottle of wine to five cents for a 24-case of beer and seven cents for a 750 ml bottle of spirits.

Food inspection

On a related note, up to $149.3 million will be spent on renewing core food safety inspection programming over five years, an exercise that is to be delivered by the Canadian Food Inspection Agency (CFIA) and Health Canada.

The proposed investment would support inspection activities in meat processing facilities, support targeted programming to address the risks associated with listeria contamination, and allow for the ongoing operation of the CFIA’s Inspection Verification Office.

Canada is currently the world’s fifth-largest agri-food exporter, shipping out $6.1 billion worth of animal protein every year and supporting more than 66,000 jobs.

‘Unwelcome news’

Joyce Reynolds, executive vice president of government affairs at Restaurants Canada, had mixed views on the budget.

“Alcohol is already an over-taxed commodity in Canada, so the increase is unwelcome news for licensees and their customers,” she said.

“This increased federal tax, compounded by the myriad provincial taxes and liquor board markups, won’t help the hospitality industry grow jobs or the economy.”

On a more optimistic note, she added: “Restaurants Canada looks forward to working with the federal government to grow the vibrant culinary sector, which is a key component of a successful tourism strategy.”

Additionally, the Canadian Meat Council welcomed news of fresh funds for food safety.

Speaking to, Christopher White, president and CEO of the group, said: “We were very pleased with the government’s commitment to the Canadian Food Inspection Agency.

“Food safety and the integrity of the system are paramount and we look for ways to continue to work with CFIA to deliver on their mandate.

“The Canadian Meat Council also welcome the government’s commitment to deliver through Innovation Canada the six economic growth strategy tables, particularly agri-food, which is of paramount importance to the industry.”