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GST food exemption - the other side of the debate



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RESTAURANT & CATERING

RESTAURANT & CATERING AUSTRALIA Level 3, 551 Pacific Hwy, St Leonards 2065

02 9439 6682

Media Release (embargoed until 1pm Tuesday, 23 Feb 99)

GST FOOD EXEMPTION - THE OTHER SIDE OF THE DEBATE

Restaurant & Catering Australia waded into the GST Food Exemption debate today with a strong statement supporting the inclusion of food in the GST net.

National Executive Officer, Jenny Lambert, said "So far the debate over whether food should be included in the GST has virtually been one of Government and Big Business v the Re$t. This is not telling the full story about how small business industries such as ours, and the people we employ, will be dramatically affected if food is exempt."

"The Canadian experience is a scary one for our industry. In that country, when the GST was introduced in 1991 with grocery food exempted, it resulted in an immediate sales decline of more than 10%, a loss of 46,000 jobs and a sharp decline in the market share of the food dollar spent away from the home."

"Even 5 years later, after an business cycle recovery, the Canadian foodservice industry had not recovered all that it lost with employment in 1996 over 17,000 less than pre-GST times," Mrs Lambert said. "In Australian terms, this experience would translate to an immediate loss of 20,000 jobs and in the long term, a loss of 7,000 jobs, many of which will be young people who are normally given a start to their working life in our industry."

Not only is employment a concern, but the inequity and the anomolies will be enormous. In Canada, for example, pizzas sold fresh or frozen in the supermarket are exempt, but pizzas from a pizza shop are not. In other countries, pies are sold cold and a microwave is provided for the customer to warm them so as to escape a GST.

"Why would Australia want to jump from one inefficient system to another", Mrs Lambert said. "The current debate poses as many questions as it does answers. How the legislation finally defines food and from where it will be sold will have a major impact on our industry. As our attached illustrations show, the more food items in the GST exemption, the worse the impact will be on our industry."

"Whilst we have sympathy for the sentiment of helping the low income earner, it is important to recognise that customers of all income levels use foodservice outlets such as take aways. cafes, restaurants and pubs. Why should a fresh fruit salad sold to a pensioner in a club be taxed, whereas a salad in a gourmet salad bar of a supermarket is not?" -

“The Restaurant & Catering Industry strongly urges the Democrats and Senator Harradine to reconsider their position and look at the issue from all, Mrs Lambert said."

For further information, contact Jenny Lambert, 02 9439 6682 or 02 9439 6633 Mobile 0418 277 919