Jeff Rheaume, owner and manager at The Broadway Bar & Grill Ottawa, says his business has been brisk this month, crediting it to new initiatives to boost traffic.
But that doesn’t mean there is more money in servers’ pockets. Since the GST/HST holiday began, Ontarians are paying smaller bills overall, meaning percentage-based tips earned by servers are down.
The Broadway, for example, has seen a decrease in server tips as bills got smaller, Rheaume says.
The numbers bear this out. In December 2024, Ontarians spent three per cent less on dining out compared to the previous year, according to a Capital Current analysis of data from Statistics Canada that tracked consumer spending from December 2023 to December 2024.
A $100 bill at The Broadway before the tax holiday began Dec. 14 would be a $87 bill under the relief — making a 15 per cent tip go from $15 to $13.
Over time, this difference adds up.
The tax relief was brought forward by the federal government last year to offer consumers a break on a slate of goods.
The tax holiday said that prepared meals and food, as well as all non-alcoholic beverages and eligible alcoholic beverages provided at restaurants, pubs, bars, food trucks, and other establishments qualified for the break. In Ontario, which has the second-highest goods and services tax amount with its combined GST and PST, the 13 per cent HST was off the bill.
In addition to lowering costs, the initiative was thought to promote more spending at businesses like restaurants.
“I haven't had anybody who's basically said ‘we were coming out because there's no tax’,” Rheaume said. “The biggest difference that I hear about all the time is that all those bills are slightly smaller in terms of tipping for servers.”
Jane Stinson, a Carleton research professor specializing in the Canadian economy, said tips represent a large portion of servers’ income since their wages are already “so low”. The minimum wage in Ontario has been $17.20 per hour, since October 2024.
Preceding factors, such as the COVID-19 pandemic and Canada’s cost-of-living crisis, have also contributed to consumers’ overall lack of tipping, Stinson says.
Despite December typically being a busy season for restaurants due to the holidays, there was a drastic decrease in dining out spending between November 2024 and December 2024. In December, Canadians spent 4.5 per cent less at restaurants compared to November.
A decrease was seen between these months in every province in the country, according to a Capital Current analysis of the data.
Atlantic Canada saw the largest decrease in dining out spending. New Brunswick had the largest decline, at just over four per cent less compared to the previous year. Outside of the Maritimes, Ontario had the largest decline.
Consumers have also been affected by the cost of living crisis that has limited spending on non-essential items such as restaurant meals. As well, the habit of soliciting tips at an array of businesses has caused consumer anger.
“[These factors] create a resentment about paying tips,” Stinson said. “We have seen more evidence of complaints about the increase in the suggested amount for tipping.”
If tipping practices have been based on adding a percentage to the total cost, Stinson said the tax break “has lowered the total value of the bill”.
“That could have also lowered the amount that servers are getting as tips,” Stinson said.
Miguel Partington has worked at a Moxie’s restaurant in Gloucester, Ont., since May 2024.
The University of Ottawa human kinetics student, said he has noticed customers are willing to spend more on other courses, such as dessert, especially during the holiday season. However, he said the total amount of his tips has lowered, despite the fact that he still receives the same percentage of tips from his bills.
“They’re saving money on the bill,” Partington said. “The total bill is less, so I’d get less tips.”
Although Partington lives at home, he says this can cause an issue for full-time servers who rely on the extra income.
“[Some] people will have really bad nights where there are no tips. ”
For his part, Rheaume said he knows how significant tips were from his days living paycheque-to-paycheque. For his servers, he knows the smaller bills have had an impact.
“It just ends up being less money in their pocket,” he said.
