Posted February 6, 2009

Restaurant and bar owners unfairly targeted by government

FREDERICTON - The province is imposing millions of dollars in new costs on bar and restaurant owners, and clawing back an important revenue stream, even though many bars and restaurants are struggling to survive during the economic downturn.

The provincial government announced $1.2 million in new fees for licensed restaurants and bars on Feb. 2. In addition, the government has already clawed back VLT commissions and removed a large number of machines from small operators to subsidize racetracks and a new casino.

These changes, along with the increase in minimum wage last week, add up to more than $11 million in new costs, and millions of dollars in lost revenues.

"This is the worst possible time for government to be increasing costs for restaurant and bar owners," says Luc Erjavec, Vice President Atlantic Canada with the Canadian Restaurant and Foodservices Association (CRFA). "Many restaurant and bar owners in New Brunswick are barely hanging on in such a tough economy, and this latest move by government will push some of them right over the edge."

The average restaurant in New Brunswick has seen its pre-tax profits shrink to just 3.1 per cent of sales. The new costs in 2009 will reduce their profit margin to just 2 per cent.

The 1,700 restaurants and bars in New Brunswick employ 23,700 people, or 6.5 per cent of the province's workforce. The industry has shed 1,300 jobs since 2006, due to declining sales and rising costs.

The fee hikes announced on Feb. 2 include: $225 for a restaurant license that used to cost $85; $850 for a lounge license, up from $575; and a new VLT license fee of $1,200 a year.

"Our industry isn't asking for bail-outs or subsidies. All we're asking for is government policies that encourage restaurant and bar owners to succeed, expand, and create more opportunities for New Brunswickers," says Erjavec. "Unfortunately, the province is doing exactly the opposite and will end up driving more operators out of business."

© Copyright 2009/Exchange Morning Post/Exchange Business Communications Inc.
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