Hospitality and foodservice industry associations have criticized the federal Budget 2022 published on April 7, with Restaurants Canada saying that it leaves restaurants “hungry for more” by failing to address key issues.
The association said that while it welcomes a number of commitments made by the federal government, failing to respond to calls for extended loan forgiveness and repayment to aid the industry’s revival is a critical oversight.
“While Restaurants Canada has appreciated the longstanding government support over these last two years that helped our industry survive the pandemic, today’s 2022 federal budget falls short of the sector-specific commitments required to help the 90,000 restaurants recover and rebuild,” said the association in a statement on April 7.
The statement emphasizes that 80 per cent of restaurants have taken on debt due to COVID-19 and nearly two-thirds of these businesses need at least a year-and-a-half to recover.
Meanwhile, the Canadian Federation of Independent Business (CFIB) asserts nearly 19 in 20 businesses (94 per cent) say their costs have increased at a time when they can scarcely afford it.
CFIB president Dan Kelly emphasized in a statement that Budget 2022 ends all COVID-19 support programs, including the Canada Recovery Hiring Program, “which was meant to help small firms rebuild their workforce in the post-COVID recovery phase”.
Some key measures praised
Restaurants Canada did praise Budget 2022 for working with industry, provincial, and territorial counterparts and Indigenous tourism operators to develop a new post-pandemic Federal Tourism Growth Strategy “which will help the sector plot a course for growth, investment, and stability”.
It also commended the federal government for pledging to eliminate the excise duty on low-alcohol beer from July 1, 2022; improve key elements of the Temporary Foreign Worker program; phase out access to the small business tax rate more gradually, and review whether the tax system is providing adequate support to investments in growing businesses. The government is also offering individual grants of up to $100,000 to fully fund private and public projects aimed at helping businesses and groups in the tourism and hospitality sectors recover from an economically punishing pandemic.
CFIB’s Kelly noted that for years, many growing and capital-intensive firms have lost access to the lower tax rate of nine per cent on the first $500,000 in corporate income when they reach $15 million in taxable capital. He congratulated the government for raising that threshold to $50 million, “encouraging more small firms to grow to medium-sized”.
Kelly added that the changes to the TFW program will be of “significant help” to small businesses struggling to rebuild their workforce.
Restaurants Canada Vice President, Federal and Quebec Affairs, Olivier Bourbeau added: “We appreciate that the government has listened to our industry on several of our key issues, including the elimination of the punitive alcohol excise tax on certain products.”
“A missed opportunity”
However, Bourbeau added that while Budget 2022’s measures represent the first steps, “it is still the foodservice industry that was the hardest-hit by the pandemic, with operators taking on enormous mountains of debt to survive. This has made the need for extensions on loan repayments through to the fall more crucial than ever before.”
Kelly, meanwhile, called it “a missed opportunity” to help small firms facing massive cost increases on virtually every line of their own budgets.
“It also doesn’t help the two thirds of businesses (67 per cent) that were forced to take on COVID-related debt, at an average of $158,000 per business,” added Kelly.
Further support needed
Kelly stressed that CFIB will continue to advocate for a small business hiring incentive and 50 per cent forgiveness of Canada Emergency Business Account (CEBA) loans.
Meanwhile, Restaurants Canada’s statement chastised the government for failing to “create the best possible conditions for recovery after over two years of either losing money or barely breaking even” by providing adequate financial relief.
The association said it remains committed to working with all levels of government toward:
- Sector-specific funding programs dedicated to the foodservice industry that offer extensions on loan reimbursement, tax credits and/or other sources of funding to defray the exorbitant costs incurred from pandemic safety expenditures
- “Do no harm” approach to taxes, fees and regulations to create the best possible conditions for recovery after over two years of losing money or barely breaking even
- A whole-of-society approach to waste reduction, recognizing the need for consumer education to ensure single-use takeout and delivery items are successfully recycled or composted.
“Even before the emergence of COVID-19, consumer demand for takeout and delivery was already on the rise. Now over two years into this global crisis, the pandemic has very clearly reinforced the critical need for single-use items to ensure the health and well-being of Canadians as they continue to expect off-premise dining options,” added Bourbeau.
The full Budget 2022 can be found here.