Omar Tohme estimates at least 40 per cent of the city’s restaurants have gone – or will go – under due to Quebec’s new cash register laws. The owner of Café Castel, a busy coffee and lunch spot on the corner of Peel and Sherbrooke, Tohme’s fighting to make sure he isn’t one of them.
As part of its measures to combat tax evasion, the Quebec government informed restauranteurs last year that having a sales-recording module (SRM) attached to their cash register would become mandatory as of Nov. 1, 2011. However, the restaurant owners would be responsible for providing their own SRMs (one per register) and for making sure their cash register and receipt printer were compatible with the SRM. Despite the subsidies Revenu Quebec offered to restaurant owners to help offset some of the costs associated with purchasing the SRM and SRM-compatible equipment, Tohme says it’s an expense not many restaurants can bear the brunt of.
“It’s putting a lot of businesses out of business,” he said.
Sitting in an annex of the Best Western hotel lobby, Café Castel’s new setup cost Tohme $15,000, after receiving a $6,000 subsidy for complying early. That includes a cash register bought the previous year that proved incompatible with the SRM ($9,000), the new cash register ($9,000, but $3,000 post-subsidy), the SRM itself (about $1,000) and the cost of hiring a technician to do the wiring to the server in the basement. “If they could grab us by our socks and shake us... that’s the next thing,” he says of Revenu Quebec.
Revenu Quebec spokeswoman Valérie Savard says small food business owners were not required to spend as much as Tohme did. “Restauranteurs could have obtained a cash register and a printer starting at $1,500,” she said.
Savard also says the reason the SRMs themselves were not provided by Revenu Quebec to restaurant owners was because they wanted to maintain a hands-off approach when it came to the actual nuts and bolts of the equipment. They also wanted to leave it up to the restauranteur to freely choose where to buy their equipment and who would install it, Savard says. Revenu Quebec did, however, provide subsidies based on when the equipment was purchased and activated. But for businesses who missed the boat or for those who began operating after the subsidies ran out, they’re out of luck.
Whether it costs $1,500 or $9,000 to get the register and SRM, the cost is prohibitive for Liana Lessard, co-owner with brother Greg Lessard of Sweet Lee’s, a young neighbourhood bakery in St-Henri. As it stands, Sweet Lee’s is exempt from the SRM law because it is a bakery without space inside for people to sit down and eat. Their dreams of a summertime terrasse out front may be dashed, though, if it means they’ll have to cough up the cash to get a new cash register, printer and SRM. “It’s a struggle since we don’t know how [business] is going to go, especially in the first few years,” Lessard says.
Barcode with your latte, sir?
The SRM, a piece of technology designed by IBM Canada for Revenu Quebec, records all sales entered into the cash register and sends the information required to print the bill to the receipt printer. Customers can recognize the presence of an SRM in an establishment from the barcode on the bottom of their bill.
The tough measures were brought on by Revenu Quebec’s approximation that $300 million is lost to tax evasion annually. Whether it happened overtly—”if you pay cash, you don’t pay tax”—or surreptitiously, via the use of zappers, the evasion at the point-of-sale level was a way of keeping a little bit more money in business owners’ pockets and out of the government’s.
Finance Minister Raymond Bachand estimates tax losses from unreported transactions are about $400 million annually, and the machines will help the government recuperate about $300 million.
"If you go to a restaurant and you your pay your bill and you think you're paying your sales tax, but it's pocketed by the restaurant owner, you should be mad as a taxpayer," said Bachand.
Tohme agrees there are a lot of restaurants that don’t exactly operate on the up-and-up. Even with the SRM law firmly in place now, he’s seen some owners keeping the register open to prevent the SRM from recording each sale. “I can understand why [Revenu Quebec] is doing it, but for people like me, it’s a lot of extra cost,” he said.
A lot of extra cost for something most customers don’t want in the first place. Over 90 per cent of people don’t even want their bill, Tohme says. Café Castel used to go through a box of receipt paper every two to three months; now Tohme’s lucky if he can get a box to last two weeks. “It’s a huge paper waste,” he said, shaking his head.
The new laws have generated uncertainty at Sweet Lee’s. “I’m anxious to see how the first year goes with all businesses,” Lessard says. The bakery moved from production-only to being open to the public just this past September—too late to qualify for Revenu Quebec’s subsidy program if they had wanted to serve people on premises. Now that they’re exempt from the new law, they may be pigeonholed as a take-out counter if they can’t afford both an expansion and the SRM equipment. The terrasse may have to wait.
“We’re here to serve and enjoy our customers, and this kind of takes a bit of the fun out of it,” Lessard says.
