FOR IMMEDIATE RELEASE March 27, 2013 Restaurant industry believes benefits of harmonization tempered by tax increases Charlottetown

Enthusiasm for the long anticipated benefits of harmonization on the PEI restaurant industry have been tempered by a slew of tax increases announced in todays provincial budget. The Canadian Restaurant and Foodservices Association (CRFA) believes some of the benefit of a lower tax rate for restaurant customers and the introduction of full input tax credits for operators will be offset by an increase in the Small Business Tax rate and an increase in hidden beverage alcohol mark-ups. The move to harmonize will mean lower prices for restaurant customers and increased sales and investment in the foodservice industry, says Luc Erjavec, CRFAs Atlantic Canada Vice President. That being said, its unfortunate restaurants and our customers will not realize the full benefits of harmonization because government has chosen to increase the small business tax rate for restaurant owners and pocket the savings that PEI Liquor Control Commission (PEILCC) customers should have seen on the alcohol they purchase. PEI restaurant customers will see the tax on meals reduced from 15.5% to 14% and operators will now receive input tax credits for the PST portion of their taxes. The Small Business Tax rate will increase from 1% to 4.5%. PEILCC will not see the anticipated decrease in alcohol prices because of an increase in the hidden mark-ups on alcohol. As PEIs third largest private-sector employer, the restaurant industry directly employs nearly 5,100 Islanders at more than 320 establishments. Twenty-two per cent of Canadians were first employed by the restaurant industry, making it the number one source of first jobs. CRFA is one of Canadas largest business associations, with more than 30,000 members representing restaurants, bars, caterers, institutions and other foodservice providers. Canadas $63-billion foodservice industry employs more than one million people in communities across the country. -30Contact: Luc Erjavec, 902-209-0804 (cell) or lerjavec@crfa.ca; Prasanthi Vasanthakumar, Communications Specialist, 1-800-387-5649, ext. 4254 or pvasanthakumar@crfa.ca.