Restaurant Owners Frustrated by Exclusion From Provincial Small Business Tax Cut

Greg Gunnarson watched Manitoba's 2026 budget land and felt the sting almost immediately. As co-owner of the Capital Grill and Bar in Winnipeg, he knew what a food tax break could mean for a restaurant's bottom line: the federal GST holiday that ran from December 2024 through mid-February 2025 had significantly helped his numbers. This time, his industry was left out entirely.

Manitoba's NDP government announced in its Budget 2026 that it will eliminate the provincial sales tax on all food sold in grocery stores, effective July 1. The exemption covers items that previously carried PST, including prepared foods like rotisserie chicken, sandwiches, and samosas. A shopper grabbing dinner at a supermarket will soon pay no PST. A diner ordering the same meal at a restaurant still will.

The Manitoba Restaurant and Foodservices Association called it an unfair disadvantage. Operators across the province argued the distinction makes little economic sense at a moment when the industry is already absorbing relentless cost pressure from food inflation, wage increases, and staffing instability. Restaurants already run on margins that leave almost no room for competitive disadvantage before schedule cuts or price hikes become the only answer.

Finance Minister Adrien Sala acknowledged the criticism after the budget landed but stopped short of any commitment to revise the policy. "As a listening government, they can count on us to continue being open to that dialogue," Sala said, adding that the savings would reach "shops in all corners of Manitoba, large and small."

Premier Wab Kinew had promoted the measure at a news conference inside a grocery store, eating rotisserie chicken and framing the cut as relief for families grabbing dinner on the way to hockey practice. The government projects the exemption will save Manitobans $24 million.

For Gunnarson and operators like him, the math lands differently. A grocery store can now sell tax-free prepared food that competes directly with what a restaurant serves, while restaurants continue collecting PST on every plate. With no date set for a follow-up meeting with the industry and no indication the government intends to revisit its definition of eligible food sellers, the July 1 effective date for the exemption is shaping up to be a deadline restaurant owners are watching with considerable unease.