Restaurants Canada turns up PST cut heat

Manitoba Premier Wab Kinew is being put on blast by a national organization aiming to get restaurants included in a proposed PST cut.

Restaurants Canada alleges it has repeatedly contacted the NDP government for a meeting with the premier.

It said it was told on Tuesday that Kinew was unable to meet due to “heavy scheduling demands,” but another minister would take his place. Restaurants Canada declined to share the email in question, citing a need to protect a junior government staffer’s identity.

“I’m shocked that a sector of our size … that (Kinew) is not meeting with us, that we were not consulted early on, that there wasn’t more thought put into this entire policy,” said Kelly Higginson, Restaurants Canada’s president. “This is not a neutral affordability measure.”

Her team met with Manitoba’s finance, labour and tourism ministers upon learning the government will cut its retail sales tax in grocery stores. The change is expected to occur July 1.

Restaurants Canada has repeatedly said the measure unfairly disadvantages eateries.

It considers takeout grocery store items direct competition.

It issued a statement Wednesday, urging the Manitoba government to apply the tax cut broadly to prepared foods. Higginson said she wants to meet the premier “as soon as possible.”

The change is being debated — and could pass — in the house this week.

Kinew has been in Alberta for an annual western premiers’ meeting; Manitoba’s MLAs have been sitting through a marathon debate to pass the year’s budget.

In a statement, Finance Minister Adrien Sala said he’s met regularly with Restaurants Canada. Budget 2026 addresses the industry’s top concern via a business-focused security rebate program, he added.

“Our government is focused on making life more affordable for Manitobans, especially at the grocery store,” his note says.

Opposition Leader Obby Khan called the budget — and the PST cut — “not … well thought out.”

“We fully stand with Restaurants Canada on this,” Khan said, adding the industry is a major employer and economic driver.

Manitoba eateries count nearly $3.5 billion in annual sales and employ around 42,000 people. Four in 10 staff are under the age of 25, according to Restaurants Canada.

Higginson warned of industry layoffs if the tax cut unrolls without restaurant inclusion.

Layoffs could occur regardless, said Sylvain Charlebois, director of the agri-food analytics lab at Dalhousie University in Halifax.

“The situation is not easy,” Charlebois said. “People have less money, and discretionary (spending) is a problem.”

This year, Restaurants Canada is projecting a 0.2 per cent foodservice sales decline. Thirty-six per cent of eateries are operating at a loss or breaking even, tripling 2019’s numbers.

Manitoba restaurants would likely see an “early bump” in sales if the PST was axed on meals, Charlebois said, adding it could be difficult to keep that increase.

He believes taxing food is “wrong.” A blanket cut for prepared food would boost competition, he said.

The industry saw a spike in sales when the federal goods and services tax was removed from December 2024 to February 2025.

Some companies may have increased prices to fill the tax gap, but it’d be harder to do with a permanent tax cut and long-term, better third-party monitoring, Charlebois said.

He believes more provinces may follow Manitoba’s lead.

On Monday, Quebec announced it would remove its sales tax on some grocery items. Provinces who use a harmonized sales tax, which combines provincial and federal levies, could have a difficult time making change — the feds haven’t shown a willingness to drop the revenue-driver, Charlebois said.

The Manitoba government budgeted a $24-million revenue loss from the tax change. That doesn’t include convenience stores, which have since been included.

Many staple foods are already PST-exempt, such as bags of bagels.

Bagelsmith sandwiches, however, come with the provincial tax because they’re prepared foods.

Winnipeg company owner Phil Klein supported the push for removing the tax on restaurant grub.

“Any time people can save money, I think it makes a difference,” Klein said. “Everything is just so expensive these days. A buck or two here or there adds up really fast.”

Government estimates say the tax cut, as it stands, could save a family of four roughly $100 annually.

Tommy’s Pizzeria owner Thomas Schneider is among the restaurateurs viewing grocery stores’ takeout food as competition. Schneider said, earlier this month, his Corydon Avenue shop has seen fewer customers than normal, likely due to the economy.

The Manitoba Restaurant & Foodservices Association is slated to meet with Business Minister Jamie Moses in June.

— with files from Carol Sanders

gabrielle.piche@winnipegfreepress.com