Critics, Opposition React to Ottawa’s Threat of Additional Taxes on Big Grocers

Critics and members of the opposition have expressed concern over the federal government’s talk of potentially imposing additional taxes on major grocers.

A worker at a Metro grocery store in Toronto on July 18, 2023. The Canadian Press/Cole Burston

Critics and members of the opposition have expressed concern over the federal government’s talk of potentially imposing additional taxes on major grocers. They argue that this move could worsen the affordability crisis faced by Canadians who are already grappling with rising food prices.

At the conclusion of the Liberal party’s three-day national caucus retreat in London, Ontario, on Sept. 14, Prime Minister Justin Trudeau said that his government is exploring various tools, including potential tax measures, to compel major grocery retailers to stabilize food prices.

The same day, the Canadian Taxpayers Federation (CTF) called on Mr. Trudeau to “rescind his grocery tax threat.”

“The last thing Canadians need is a grocery tax,” CTF Federal Director Franco Terrazzano said in a statement. “Instead of hammering Canadians with a grocery tax, Trudeau should scrap his carbon tax, which is making food prices more expensive.”

During the caucus retreat, Industry Minister François-Philippe Champagne said there would be a meeting the following week with leaders of major Canadian grocery chains, who were “told” to go to Ottawa to discuss the issue of food prices. The invitation list includes Loblaws, Empire, Metro, Costco, and Walmart. Mr. Trudeau said the grocers have been given until Thanksgiving to respond regarding their plans to stabilize prices.

“And let me be very clear: if their plan doesn’t provide real relief for the middle class and people working hard to join it, then we will take further action, and we are not ruling anything out, including tax measures,” he said.

In a video released separately on Sept. 14, Mr. Terrazzano emphasized that the current affordability crisis is linked to the government’s carbon tax. “When Trudeau’s carbon tax makes it more expensive for farmers to produce food and for truckers to deliver food, he is making it more expensive for you to buy the food. So we got to fight back on this,” he said.

Several other critics have raised concerns with the government’s carbon tax as a factor contributing to the rising cost of food. Conservative MP John Barlow, his party’s agriculture critic, shared a similar view of the Liberal’s potential grocery tax measure.

“The Liberals want to lower grocery prices? They can lower prices now–abandon own punishing policies. Axe the carbon tax. End fertilizer tariff. Eliminate warning food labels,save $2B in costs. Pause plastic packaging rules. Reign in spending,” he posted on X, formerly known as Twitter, on Sept. 14.

Supply Chain Pressure

While Mr. Trudeau said in his announcement that major grocery stores in Canada were “making record profits,” the Retail Council of Canada (RCC) said the elevated food prices have little to do with grocer prices and profit.

“The price on grocery shelves is driven by increased vendor costs from food manufacturers and producers, itself caused by a host of global factors—including supply chain challenges, the war in Ukraine, fuel prices, and climate events,” RCC spokesperson Michelle Wasylyshen told The Epoch Times on Sept. 14.

Agri-food professor Sylvain Charlebois from Dalhousie University, with whom Mr. Champagne has worked with to tackle food inflation issues, conveyed his unease with the idea of pressuring grocers on pricing, but said it was a decision made by the minister.

“I’m there to advise the minister during the process, but it’s clear he’s set on intervening and compel the grocers to adjust their prices,” Mr. Charlebois said in an interview on Sept. 14.

He also raised concerns about major brands leaving Canada, noting if prices are being mandated, the pressure will be felt throughout the supply chain.

“As an economist I’m worried, I’m really worried, because we’ve seen Nestlé get out of frozen food in Canada, Kleenex left, other brands left in recent years. If we want to increase competition, the last thing we need is an interventionist state,” said Mr. Charlebois.

“It’s a dangerous game to intervene that way, especially in the food industry when margins aren’t that big.”

He emphasized that the primary message he conveyed to Mr. Champagne was the importance of distinguishing between inflation and consumer confidence.

The professor noted that Quebec, where retail milk prices are regulated, has the highest milk prices. In terms of bolstering consumer confidence, Mr. Charlebois recommended a reform of the Competition Bureau, advocating for increased authority and expedited investigation processes.

Mr. Trudeau also said on Sept. 14 that his government is taking steps to reform the Competition Act to make “large businesses more accountable to Canadians.”

Noé Chartier contributed to this report