(Jan. 8/10) Following CRFA action, Ontario has agreed to collect $24 million less from licensees and their customers once the HST takes effect.
In November, CRFA President Garth Whyte and Ontario Vice President Stephanie Jones presented Minister of Finance Dwight Duncan with restaurant operator petitions on liquor pricing and the HST. The petition called for no new mark-ups, the introduction of wholesale pricing and elimination of the environmental levy.
Under HST, the combined liquor sales tax and GST will drop from 15% to 13%. However, the government will recover this lost tax revenue from Ontarians through higher liquor mark-ups at the LCBO.
Last year, the government collected approximately $684 million in sales tax, mark-up and fee revenue from alcohol sales by Ontario restaurateurs. To recover lost tax revenue from licensees in 2010, the government had planned to increase revenue collected through licensee mark-ups and fees by 22%.
In response to CRFA’s lobbying efforts, the province has decided to mitigate this costly increase for operators by implementing a $24-million reduction in revenue collected from licensees and their customers, following HST implementation.
Although this decision is good news for operators, input costs of wine, spirits and beer will still rise as a result of HST. Operators should prepare now to adjust menu prices and communicate changes to customers.
To assess the potential impact on your business of these price changes, click on CRFA’s calculator for beer, wine, or spirits. To view the Ontario Ministry of Finance’s illustrative example of how the HST will benefit your business, click here.
CRFA’s Ontario Vice President Stephanie Jones (left) and President Garth Whyte (right)
present Minister of Finance Dwight Duncan with restaurant operator petitions on liquor pricing and the HST.