|
(April 15, 2004) Quebec restaurants face the highest payroll taxes in the country
but were spared an additional cost when the provincial government refrained
from further cutting a key tax credit.
The tax credit was introduced to offset operators'
costs of having to pay payroll taxes on the discretionary
tips earned by employees. It was cut by 25% in
the June 2003 provincial budget, costing the
average operator an additional $2,500 in payroll
costs.
Leading up to the 2004 Quebec budget delivered on March 30, there were fears
that the cash-strapped government would put the tax credit on the chopping
block.
In pre-budget meetings in February, CRFA's Council
of Chain Restaurants: Quebec (CCRQ) outlined
the negative impact of last June's tax credit
cut and the importance of the tax credit to continued
growth and job creation in the province's foodservice
industry.
The Ministry of Finance recognized the serious
effect further tax credit cuts would have on
an industry already struggling with payroll taxes
that are 40% higher than the national average.
In addition to leaving the tax credit untouched,
Finance officials responded to CCRQ's presentation
by suggesting that government will establish
a committee to review the issue of taxation on
tips.
All Canadian tipped employees are required to
declare all of their tips as taxable income and
since 1998, employers in Quebec have been obliged
to pay payroll taxes on the tips earned by their
employees. The government introduced temporary
tax credits to relieve the financial hardship
caused by these additional payroll costs and
in 2000, CRFA was successful in preventing the
credits from being eliminated entirely. |
