TORONTO — The Ontario Restaurant Hotel and Motel Association praised the Ontario government for positively impacting property tax, hydro cost relief, raising the threshold for employer health taxes, a tourism expense rebate and making the sale of alcoholic beverages with delivery and takeout orders permanent.
Ontario’s Minister of Finance, Hon. Rod Phillips, released the 2020 Ontario Provincial Budget on Nov. 5.
ORHMA’s advocacy over the past few months has been impactful and we applaud the Minister and the Ontario Government for listening to our concerns and taking our advocacy into consideration in supporting Ontario’s Hotels and Restaurants, the association said in a news release. 2020 has been a tough year with a long and painful road ahead for recovery. The Budget sets the tone for success for those in the hospitality industry who face high expenditures and includes initiatives that are much needed.
On behalf of Ontario’s hospitality industry, ORHMA thanked the Ford government for taking action in response to its concerns.
Business Education Tax (BET)- Positive Impact to Property Tax
The government will lower high Business Education Tax (BET) rates from 1.25 per cent to 0.88 per cent for a vast majority of businesses, while offering a $5,000 reduction in small business tax relief. Ninety-four per cent of businesses in Ontario will see a reduction in their property taxes, by standardizing the Business Education Tax. What businesses currently pay depends on their location and will average a rate of 0.98 per cent. This tax reduction was directed specifically for businesses in the hospitality sector and was a top priority in ORHMA’s Relief Plan submitted to government. These reductions will result in $450,000 in annual savings to the business community starting in January of 2021.
There will also be options for allowing municipalities to match deductions. Further property tax reductions for small businesses are announced and this is also good news. It will be up to each municipality to define the size of small business.
ORHMA and the Greater Toronto Hotel Association (GTHA) worked together on this important issue and are pleased to see these positive outcomes.
Beginning January 1, 2021, the renewable energy contracts that significantly make up the Global Adjustment Cost of a hydro invoice will be paid by the provincial government, not the business.
Hotels and restaurants will see healthy monthly savings, expected at approximately 14-16 per cent for an average business. All hospitality operations have been hit hard with the Global Adjustment costs over the years and paying such an expenses during these critcal times have been tough.
Employer Health Tax (EHT)
Prior to the COVID-19 crisis, eligible employers in Ontario were paying a health tax over the first $490,000 of payroll. During the COVID-19 pandemic, the provincial government made a temporary EHT threshold exemption, increasing it to $1 million for the year 2020 during this crisis.
The Budget has announced that the $1 million threshold exemption will be made permanent. In ORHMA’s advocacy, they drove the message that many small business employers have been under the set exemption due to ongoing minimum wage increases therefore were not eligible to pay the EHT. Since 2004, minimum wage has increased by 96 per cent yet the EHT exemption amount has not changed, forcing small businesses to incur significant payments to the EHT. The government estimates that 90 per cent of businesses will not pay any EHT with this threshold.
Tourism Expense Rebate and 2021 Year of the Ontario Staycation
Committing to provide Ontario residents with support of up to 20 per cent of eligible Ontario tourism expenses encouraging Ontarians to safely discover Ontario in 2021, which has been designated as year of the Ontario staycation.
Beverage Alcohol with Delivery & Take-Out
As expected, the government has announced that the sale of beverage alcohol with delivery and take-out orders will be made permanent.