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UPDATE November 5, 2010

More HST Job Losses

Statistics Canada released the October Labour Force Survey today which included employment in "accommodation and food services". It dropped 6.7% since October 2009. That is the second consecutive monthly decline for the sector since the implementation of the HST in July 2010. The evidence on job losses due to the HST is mounting, while evidence showing positive effects of the hated tax cannot be found.

October 29, 2010

Restaurants' HST Hit Continued in August

On October 28th Statistics Canada released the preliminary August data on purchases of food services. Just two days after Premier Gordon Campbell's $240,000 taxpayer paid TV pitch to the province in which he claimed there would be economic benefits from the HST, Statistics Canada revealed food services in BC (consisting of full-service restaurants, limited-service eating places, special food services and drinking places) took a hit of 2.8% in August 2010 compared to August 2009; overall sales of food services in Canada increased by 4.0%. Those data don't come from a survey, they come from GST/HST tax remittances to Canada Revenue; they show a markedly different picture than the anecdotal stories related by some talk show hosts about what they see in restaurants they visit.

BC sales for July were revised downward to $640,632,000 from $643,823,000 reported last month. That means that relative to July 2009, BC food services sales dropped 2.7% rather than the 2.2% decline suggested by preliminary data.

Changes in consumer behaviour that are the consequence of changes in prices and incomes don't happen instantaneously. It will probably take at least six more months before we know the full extent of the damage done by the HST to restaurants and other food service providers. If forecasts are accurate, the drop will continue until it reaches between 7% and 10% less than 2009.

On top of the HST some establishments are complaining that new drinking and driving rules are hurting their business. Of course many food outlets don't have liquor licenses, including coffee shops, food fairs in malls and hundreds of small store-front restaurants. It is not clear how sales split between establishments that are and are not licensed, but whatever the split it is not good news for employment in BC's food service sector.

Restaurant employment is part of what Statistics Canada reports as "accommodation and food services" in its breakout of employment by industry. BC employment in that sector showed a decline of 2.0% in September 2010 compared to a year earlier. That was the first employment drop for the sector since the implementation of the HST in July 2010. The October data on accommodation and food service employment in BC will be released next Friday.