Cut Food Sales Tax and Boost Grocery Competition

Summary#

Bill 113 tells the Ontario government to create a plan, within 12 months, to make food more affordable and prices more fair. The plan must be posted online and must include two big moves: open up competition among food retailers and remove sales tax from food and non‑alcoholic drinks.

• Orders a plan to keep food prices fair, stable, and transparent, with public release.
• Directs the government to develop and introduce a law that voids and bans land and lease clauses that block competing grocery stores from opening nearby.
• Requires penalties for using those anti‑competition property clauses in the future.
• Instructs Ontario to remove the provincial part of the HST from all food products and non‑alcoholic beverages.
• Tells Ontario to seek federal agreement to also remove the federal GST/HST part from these items.
• Sets consultations with municipalities as the property‑rules law is developed.

What it means for you#

• Shoppers and diners

  • You would no longer pay HST on restaurant meals, takeout, snack foods, and soft drinks, if the tax is removed as planned. Basic groceries are already tax‑free; this would expand that to more items.
  • If the federal government also agrees, the full sales tax (both parts) would come off these items. If not, only the Ontario share would come off.
  • Ending property rules that block competitors could make it easier for new grocery stores to open, which may increase choice and put pressure on prices over time.

• Small food retailers and new entrants

  • Clauses that stop you from opening near a big chain (in deeds or leases) would be void and banned once the follow‑up law passes.
  • You could face fewer barriers finding sites in plazas or neighborhoods where a competitor is already present.

• Large chains and landlords

  • Existing restrictive covenants and exclusivity clauses tied to grocery competition would be cancelled by the new law, and future use would be prohibited.
  • Penalties could apply if such clauses are used after the ban.

• Restaurants and food service businesses

  • HST would no longer be charged on meals and non‑alcoholic drinks if the province removes its share (and possibly the federal share if Ottawa agrees). You would need to update point‑of‑sale systems and pricing.

• Municipalities

  • The province must consult you while drafting the property‑rules law. Local planning bylaws do not change under this bill, but new grocery competition could affect local retail patterns.

Expenses#

Estimated annual cost: would reduce Ontario sales tax revenue; exact amount is not provided.

• Removing the provincial HST from all food products and non‑alcoholic beverages would cut Ontario’s sales tax revenue. The size depends on how much Ontarians spend on taxable food, restaurant meals, and beverages.
• If the federal government also removes its share, federal revenue would drop as well. That requires federal agreement and law changes.
• The government would have some one‑time and ongoing costs to draft, pass, and enforce the new property‑rules law.
• No publicly available information.

Proponents' View#

• Cutting sales tax on food and non‑alcoholic drinks lowers bills at the checkout and at restaurants right away once in effect.
• Ending land and lease clauses that block competitors will open the market, help new stores enter, and can reduce prices through competition.
• More competition could improve service, selection, and access in areas with few options.
• A public plan and clear rules make pricing more transparent for consumers.
• Helps families facing high food inflation by taking tax off common purchases, not just basic groceries.

Opponents' View#

• The change would reduce provincial revenue by a large amount, which could mean less funding for health care, education, or other services, or pressure to raise other taxes.
• Benefits go to everyone, including higher‑income households and tourists, and could subsidize restaurant meals and sugary drinks.
• The federal government may not agree to remove its portion, creating uneven rules and confusion.
• Voiding existing property agreements could trigger legal disputes and uncertainty for landlords and retailers.
• Businesses might adjust pre‑tax prices, so the full tax cut may not always show up as lower final prices.