The GST Campaign on Restaurant Meals, Explained

A chicken caesar salad from the grocery store deli counter: zero GST. The same salad, same ingredients, prepared at your restaurant: fully taxed. That distinction costs the Canadian restaurant industry billions every year, and Restaurants Canada is now running a national campaign to end it.

The "Food is Food" campaign, launched in June 2025, calls on the federal government to permanently exempt all food, including restaurant meals, from GST and HST. The economic case is built on hard data from a two-month experiment that already proved the concept works.

Here's what operators across Canada need to understand about this campaign, what's at stake, and what you can actually do about it.

What the campaign is actually proposing

The core argument is simple: food is food, regardless of where you buy it.

Right now, basic groceries are zero-rated for GST/HST purposes. That includes raw ingredients, most packaged foods, and even many prepared items sold at grocery stores. But the moment food is prepared and served in a restaurant, the full sales tax kicks in.

Restaurants Canada wants the federal government to modernize this policy by removing the 5% GST from all food, including restaurant meals. In provinces with HST, the provincial portion would also need to be addressed, but the federal GST is where this campaign starts.

The proposal isn't new in concept. Countries like Ireland, the UK, and Australia already apply reduced or zero VAT rates to certain restaurant meals. What's new is that Canada now has real data showing what happens when you remove the tax.

The two-month experiment that changed the conversation

From December 14, 2024, to February 15, 2025, the federal government ran a temporary GST/HST holiday that removed sales tax from restaurant meals, among other items. The results were hard to argue with.

Commercial foodservice sales jumped 8.6% in January 2025. Restaurant bankruptcies dropped 50% year-over-year during that same two-month window. And the sector added 24,000 new jobs, more than the previous 12 months combined.

For an industry where 36% of operators are currently running at a loss or barely breaking even, those numbers represent the most concrete proof yet that tax relief directly translates into restaurant viability.

Metric	GST/HST Holiday Result (Dec 2024 - Feb 2025)
Foodservice sales increase	8.6% in January
Restaurant bankruptcies	50% decrease year-over-year
New jobs created	24,000 in two months
Consumer spending	Measurable increase in dining frequency

The tax holiday wasn't just about saving consumers a few dollars on a meal. It gave price-conscious Canadians enough breathing room to eat out more often, order that extra drink, or try a new restaurant. For operators, more covers meant better margins on fixed costs that don't change whether you serve 40 or 60 guests a night.

The economic case: $5.4 billion and 80,000 jobs

Restaurants Canada's economic analysis, published in June 2025, projects that permanently removing the 5% GST from all food would:

• Save Canadians $5.4 billion in taxes annually
• Create 64,300 new foodservice jobs
• Generate an additional 15,700 spinoff jobs in related industries
• Add roughly 25,000 youth jobs, given that 40% of foodservice workers are under 25

That last point matters politically. Restaurants are the number one source of first-time jobs in Canada, employing more than 500,000 young workers. A permanent GST exemption doesn't just help restaurants. It feeds the pipeline of young Canadians entering the workforce.

And public opinion backs it. According to Restaurants Canada, 84% of Canadians believe food should not be taxed, regardless of where it's purchased.

How much tax your restaurant actually collects (and remits)

The total sales tax on restaurant meals varies widely by province, and that gap is part of the problem.

Province	Tax on Restaurant Meals	Breakdown
Alberta	5%	GST only
BC	12%	5% GST + 7% PST
Saskatchewan	11%	5% GST + 6% PST
Manitoba	12%	5% GST + 7% PST
Ontario	13%	HST
Quebec	14.975%	5% GST + 9.975% QST
New Brunswick	15%	HST
Nova Scotia	14%	HST (reduced from 15% in April 2025)
PEI	15%	HST
Newfoundland	15%	HST

A diner in PEI pays 15% tax on a $30 meal: $4.50. The same meal in Alberta: $1.50. That's a $3 difference on a single plate, and it adds up fast across a full evening of covers.

But here's the real frustration for operators: in every province, the grocery store across the street sells prepared salads, rotisserie chickens, and pre-made meals at zero GST. Your restaurant sells the same food, prepared fresh, and it's fully taxed. That's the disparity at the heart of this campaign.

It's getting worse, too. Manitoba announced that starting July 1, 2026, all remaining PST on prepared food in grocery stores will be eliminated. So a grocery store deli counter in Winnipeg will charge zero provincial sales tax on a hot chicken dinner, while the restaurant next door charges 7% PST on the same thing.

Why this matters more in 2026 than it did five years ago

The restaurant industry has been in survival mode for years, and the numbers keep getting worse.

According to Restaurants Canada's Q1 2026 report, 71% of operators report declining profitability so far this year. 49% report lower sales. 54% are seeing fewer guests walk through the door. And 36% are operating at a loss or breaking even, triple the rate from 2019.

The cost pressures are relentless: 91% of operators cite food costs, 87% cite labour, and 69% say their customers are simply dining out less because of affordability concerns. Real foodservice sales are projected to decline by 0.2% in 2026 after inflation, and the Agri-Food Analytics Lab forecasts a net loss of roughly 4,000 restaurants this year.

In that environment, a 5% reduction in the price of every restaurant meal isn't marginal. For a restaurant doing $800,000 in annual sales, GST removal means roughly $40,000 less tax flowing through your POS every year. That's not money you keep (it was never yours), but it's $40,000 in lower prices that could bring back the guests who stopped coming because a $30 entree became a $35 one after tax and tip.

For a 40-seat independent restaurant already running at 3-5% margins, the difference between 54 covers a night and 60 covers a night is the difference between staying open and closing. The GST holiday proved those extra covers show up when the price drops.

What operators should know before getting excited

This campaign has real momentum, but a permanent exemption isn't guaranteed. Here are the honest considerations.

The federal cost is significant. Removing GST from all food (grocery and restaurant combined) would cost the government roughly $5.4 billion annually in lost tax revenue. Politicians will weigh that against the projected job creation and economic stimulus. The temporary holiday happened in the context of an election cycle, and permanent policy changes face higher scrutiny.

Provincial coordination is complicated. The federal government can only remove the 5% GST. In HST provinces (Ontario, the Maritimes), the provincial portion is bundled with the federal tax, so a clean exemption requires provincial cooperation. In Quebec, the QST is separate and would need its own legislative change.

The timeline is unknown. Restaurants Canada launched the campaign in June 2025, and media coverage and political engagement are building. But there's no bill, no parliamentary committee review, and no government commitment yet. This is advocacy at the "build public pressure" stage, not the "implementation" stage.

Some operators are skeptical about who benefits. If the GST is removed, does the restaurant lower menu prices, or pocket the difference? Consumer expectations will likely force transparency here. During the tax holiday, most POS systems simply stopped adding the tax at checkout, so the customer saw the savings directly.

What you can do right now

Whether or not a permanent exemption happens, engaging with this campaign costs nothing and takes five minutes.

Sign the petition at foodisfood.ca. Restaurants Canada is collecting signatures from both operators and consumers to demonstrate public support to legislators. The more signatures from actual restaurant operators, the stronger the advocacy position.

Share the campaign on your channels. Post about it on your restaurant's social media. Your guests care about food affordability, and many don't realize that restaurant meals are taxed while grocery store prepared food isn't. The awareness itself is valuable.

Talk to your MP. Restaurants Canada provides materials for reaching out to your local Member of Parliament. A personal email from a restaurant owner in the riding carries more weight than a form letter.

Track the policy conversation. This isn't a one-time petition. It's an ongoing campaign. Follow Restaurants Canada for updates, and factor potential tax changes into your longer-term planning. If a GST exemption does happen, you'll want to be ready to adjust your POS, update your pricing, and communicate the change to guests.

The bigger picture for independents

The GST exemption campaign matters beyond the tax savings. It's about whether the government treats restaurants as an essential part of the food system, or as a luxury that gets taxed like one.

Canada's foodservice industry is a $120 billion sector employing nearly 1.2 million people. But the tax code still draws an artificial line between food you buy at a grocery store and food prepared at a restaurant. One is treated as a necessity. The other is treated as a discretionary purchase.

For independents running on thin margins, with food costs climbing, labour costs rising, and fewer guests walking in, the question isn't abstract. It's whether the tax policy environment helps or hinders your ability to stay open.

The GST holiday showed what's possible. The "Food is Food" campaign is trying to make it permanent. Whether you think it will happen or not, adding your voice to the conversation takes five minutes and costs nothing.

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Sources: Restaurants Canada Economic Analysis, Food is Food Campaign, Restaurants Canada Q1 2026 Report, Government of Canada GST/HST Break, CBC News, Restobiz Manitoba PST.

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