Canada

'Not that much of a deal': Shoppers, businesses lukewarm on GST holiday

The federal government announced the plan to temporarily waive the five per cent goods and services tax in a bid to help ease affordability concerns during the holiday season.

2-month tax break applies to things like restaurant meals, children's clothing

GST/HST holiday has begun — but how does it work?

1 day ago
Duration 5:02
This Saturday marks the beginning of the Liberal government's two-month GST/HST holiday that it says will give Canadians a break on the cost of some essential goods. Yet some say the list of tax-free items is confusing for businesses and consumers.

Shoppers and businesses across Canada are expressing mixed feelings and showing little enthusiasm as a two-month break from the federal GST took effect on Saturday.

Lori Parker, the owner of an independent toy store in Toronto, said the sales tax holiday could be good for business because it makes shopping cheaper for customers, but the measure means more work for her staff over the holiday season.

"It does give them a break on costs," she said. "But we knew from the get-go that it would be a lot of work."

The owner of Treasure Island Toys said her shop sells thousands of items, and it was not easy to figure out what's covered with the GST break.

"It was very laborious. We spent a lot of time reading and re-reading what was included in the tax break and what was not included," Parker said.

A sign posted at a convenience store cash register advertises a 5 per cent discount on a list of items.
A sign advertising no goods and services tax on certain products is displayed at a convenience store in Montreal on Saturday. (Graham Hughes/The Canadian Press)

"The rules ... were quite ambiguous, so they were subject to interpretation. We spent a lot of time talking to other retailers and suppliers about how they were interpreting the rules."

The federal government announced the plan to temporarily waive the five per cent goods and services tax in a bid to help ease affordability concerns during the holiday season. Provinces with a harmonized provincial and federal sales tax will see the full HST waived.

At the Eaton Centre in downtown Toronto, Kishore Basu said he was shopping for Christmas gifts for his family members and is not going to change his shopping list due to the GST holiday.

"The GST doesn't add that much in the end to most of those goods," he said. "I don't think it's significant enough to change spending patterns."

WATCH | Retailers wonder if GST break worth the trouble: 

Frustrated retailers wonder if Trudeau's GST break is worth the trouble

2 days ago
Duration 1:57
Some retailers and small businesses are already frustrated and confused by the Trudeau government's temporary GST/HST break. They say the expected savings for consumers likely won’t lead to enough extra sales to make the added paperwork worth the trouble.

Basu said he doesn't think the GST break will be helpful for most people.

"I'm sure it will help some Canadians, but I think the marginal benefit versus what's added to the deficit isn't worth it," he said.

"It's only for two months, and it's going to come back. It seems to me more like an election ploy than anything else. I think most people see that."

A person carries shopping bags along a street.
A person carries shopping bags along a street in Montreal on Saturday. (Graham Hughes/The Canadian Press)

In Montreal, Patrick Neault, general manager of Raffin Bookstore, said the chain had to shift some staff during the holiday season to make sure the store was compliant.

"We worked kind of hard the last three weeks so that it goes fluidly today, and it's working fine so far," he said, adding Ottawa's GST holiday wasn't welcome news when first announced.

But Nault said he isn't certain that the benefits for retailers and shoppers will ultimately outweigh the extra work staff had to put in.

WATCH | How much is the GST holiday actually saving you?:

GST holiday: How much are you actually saving? | About That

19 days ago
Duration 12:24
The federal government will implement a two-month GST break on a list of goods, from restaurant meals to diapers. Andrew Chang explains how much you're likely to save, depending on where you live, and why there could be some unintended consequences.

"It's not that much of a deal. It's like a few per cent [discount] on a transaction. I'm not sure that's a very strong incentive," he said.

At a bustling mall in Halifax, Katrina Rose set out early in the day to buy her young daughter's holiday outfit. She said she waited until the tax break took effect to make some holiday purchases to take advantage of savings.

"My daughter is a huge book lover, so things like books and board games and those regular toys we'd like to get for the holidays I saved until now," she said in an interview on Saturday.

People walk out of a store displaying a sign that reads, 'Save the tax,' written in French.
People walk by a sign advertising 'save the tax' at a store in Montreal on Saturday. (Graham Hughes/The Canadian Press)

Meanwhile, Jennifer Matthew said she forgot the tax break was starting on Saturday and didn't factor that into her holiday shopping. She said the tax break on food, alcohol and clothing will help with some savings for her and her two daughters, but it won't bring about a significant amount of savings in the grand scheme of things.

"I don't think it's going to put a big dent in my wallet by any means. I don't think we'll be able to book that holiday, but like anything, every penny helps," she said.

Her 10-year-old daughter, Ruby, said she's excited about the potential savings the break will bring for some hoodies she's had her eye on.

'We are helping to reduce costs for families'

The tax break, set to run until Feb. 15, 2025, applies to dozens of items, including restaurant meals, children's clothing, wine and beer, children's toys and Christmas trees.

However, product categories eligible for GST relief have plenty of exemptions, with items like food and drinks from vending machines, magazines, clothing for sports activities and some collectibles and toys not making the cut.

WATCH | Can the federal government afford to implement the GST holiday?:

Can the federal government afford to implement the GST holiday?

5 days ago
Duration 3:12
Economists say the federal government's temporary GST exemption on select goods could have inflationary consequences for the economy. Taleeb Noormohamed, the Liberal MP for Vancouver Granville, talks to BC Today host Michelle Eliot about what the government considered when it decided to implement the temporary tax relief measure.

In a press release on Saturday, Innovation, Science and Economic Development Canada said Ottawa is doing what it can to help Canadians struggling with their budgets.

Kamal Khera, the minister of diversity, inclusion and persons with disabilities, said in the release that the cuts should help with the added expenses the holiday season often brings.

"With new tax cuts on essentials and holiday expenses, we are helping to reduce costs for families when they need relief the most," she said in a statement.

Kelly Higginson, CEO of Restaurants Canada, said in the release that she was pleased with the decision to temporarily waive the tax, which should give a boost to sales in the restaurant industry.