Food is essential to life. It should never be taxed.
While governments focus on macro-economics, many families can't afford macaroni.
Canadians across the country are struggling under the rapidly rising cost of living – housing, energy and food. Cost of living was the top issue in Ontario’s June election. Governments are focused on macro-economic anti-inflation controls. But, it’s hard to eat macro-economics. Meanwhile, the cost of macaroni is now out of reach for many families. So, why are we taxing people who need to eat?
Inflation in Canada is at its highest in 40 years. Within that measure, food prices overall rose almost 10% year over year in May. Some food staples, including flour and cooking oil are up 30%. The cost of pasta is up 18% since 2021. Four litres of milk cost 10% more this year over last, and is scheduled to increase another 2.5% this fall – a price that is fully managed by a government-protected cartel that would be illegal in most countries. The poorest Canadians can’t afford to buy four litres of milk at a time and have no room to store it in tiny apartment-sized fridges, if they could. So, they’re paying even more on a per litre basis.
"I have to strike a balance. One is supporting Canadians with affordability challenges and the other is fiscal restraint, because I don't want to make the Bank of Canada's job harder than it already is.” – Finance Minister Chrystia Freeland, in conversation with Rosemary Barton on CBC
The federal government’s anti-inflation efforts so far have largely been limited to the Bank of Canada hiking interest rates to rapidly raise the cost of borrowing. This, in an attempt to discourage people borrowing money to spend – which fuels inflation. The problem with this approach is the bank’s efforts do nothing to help average Canadians afford food, that is essential for life, or the fuel they require to go to work every day.
Higher interest rates may dissuade you from buying groceries on your credit card. But, most people do not pay for groceries with their credit card — and those who do, are probably not in financial peril. If you qualify for a credit card, and there’s unused spending room on it, you’re not likely hungry enough to need a break on groceries.
Why do we tax food?
I’ve done some rudimentary research (admittedly limited to Googling sciency studies) and I’ve learned there is, at least, a very strong correlation between eating food and staying alive. Some researchers go so far as to suggest food may be essential to life.
Accepting this emerging scientific consensus as valid, I do not understand why our governments actively, and by design, make food more expensive.
They do this by taxing food directly with consumption taxes: HST, GST, PST. If you eat, you pay tax on many foods, in many places. This makes no sense. Unless, of course, it’s because government intentionally chooses to tax things you cannot live without consuming. But, that would be draconian. No?
If Justin Trudeau, Doug Ford and the other provincial premiers want to do something to immediately ease the cost of living for their constituents, they could do so by eliminating their taxes on food. All food. That would provide and immediate 5-13% reduction the cost of many foods.
But… isn’t food already tax free?
No.
“Basic groceries” are HST/GST exempt in most provinces. “Prepared” foods including restaurant meals, convenience foods, snacks and single-serving food items, are generally taxed. Restaurant meals are taxed in Ontario.
Some critics of my idea suggest poor people can’t afford to eat in restaurants, so the tax doesn’t affect them. But, it does.
First, a lot of poor people work in restaurants. They and the restaurants that employ them were hardest hit during COVID. Eliminating consumption taxes on their principal products would at the very least encourage more people to eat out. That would help the owners and workers of our restaurants.
Second, there have been many times when I fed my kids McDonald’s because it was the cheapest meal I could provide. And I paid tax on it.
Many new condos in downtown Toronto are about 450 square feet. They often don’t have full-sized stoves and refrigerators. Few have freezers big enough for more than an ice cube tray. There’s often one or two cupboards and a few small drawers. Buying in affordable bulk quantities isn’t an option. And these are not poor people. They’ve got good incomes – but still not enough to afford living in the city where they work. Should they move out of town? They’d have to travel far to find a cheaper place to live, and whatever they save on rent they’ll spend on commuting. Their jobs, after all, remain in the city.
Poor people have even fewer opportunities to capitalize on volume discounts and “bulk” deals.
Some food items bought in some places in some quantities are exempt from some taxes. “Basic Groceries” are exempt from HST. But “Basic Groceries” is a label defined by overpaid, underworked civil servants who will never have to check the sticker price of a ribeye steak before they plop it into their overstuffed grocery cart at Whole Foods.
According to these fat cats at Canada’s revenue agency, “Basic Groceries” do NOT include: vegetable plants (parts of which are edible) whatever that means, cooking wine, grape juice concentrate, carbonated beverages including water, some fruit juice beverages or fruit-flavoured beverages, frozen concentrates, and single-serving containers of any beverage. Also taxable: water when dispensed in single serving volumes, including the “supply of an individual single serving of unbottled water” – i.e. a glass of water.
“Prepared Foods” over $4 are taxable in Ontario. This may come as a shock to the financially comfortable in Canada, but many poor people eat prepared foods from grocery stores. You can buy a ready-made sandwich there for $4 to $7. It’s hard to make the same sandwich yourself for less. Sure, you can probably buy a loaf of bread, a jar of mayonnaise, a bottle of mustard, a package of cold cut meats and cheese, a head of lettuce and a couple of tomatoes – then make a dozen sandwiches for a unit cost below $7. But that’s a $60 investment and it presumes you have a kitchen, a fridge and a pantry to cook and store food in.
How much tax you pay on restaurant meals varies from province to province from as low as 5% to as much as 15%. Why? Is food three times more essential in Alberta than it is in New Brunswick? Seems unlikely. Pizza has often been a cheap meal option for me and my family. It’s taxed.
If I buy a 24-pack flat of apple juice that is at least 25% natural apple juice (the remainder, presumably, water) I pay zero tax. Notably, the higher the natural fruit content in the juice, the more it costs. But, if I can only afford to buy one of those bottles of apple juice, I pay more for it on a unit basis and I pay tax on it. Why?
The solution is simple. And obvious.
There are likely hundreds of thousands of pages of government documents, laws, memoranda, regulations, guidelines, instructions and other diktats explaining what gets taxed, where and how much. To interpret those pages, there are tens of thousands of government bureaucrats drawing top-notch salaries with gold-plated pension and benefits plans. The cost to taxpayers, for collecting their taxes, is enormous.
None of those pages and none of these bureaucrats, however, can explain why the things that are taxed are taxed, and the things that are not taxed are not.
Canada is in crisis. Canadians are struggling. Families cannot afford food.
It’s time for governments at every level to act. One simple thing they can do is to rationalize our consumption tax regime to the facts of life – Eliminate all taxes on all food, everywhere, no matter how it is consumed.
Food is essential to life. It should never be taxed. Period.
Do you agree?