With a little more than a week remaining in the federal government’s GST/HST tax holiday, data collected by one Canadian commerce provider shows spending patterns compared to the same time last year remain more or less the same. Over the first month of the tax holiday, Canadian payment processor Moneris data shows, even with the matching provincial tax, transaction levels are slightly down compared to data from Dec. 14, 2023, to Jan. 15, 2024, when no tax break was in place. “While the tax break aimed to spur spending, Moneris’ data shows it may have unintentionally slowed it down,” says Sean McCormick, director of business development for data services at Moneris. “With a (three per cent) decline in overall transaction sizes year-over-year, the data suggests that the break may not have had its anticipated effect.” Atlantic Canada was one of the only regions to match numbers year over year. While the four provinces collectively saw no change to the number of transactions, there was a decrease in overall spending by six per cent. Nationally, overall spending dropped four per cent. The number of transactions was down a lone percentage point, while the size of the transactions reduced by three per cent. Items to fall under the tax exemption include children’s clothing and toys, books, alcoholic beverages below seven per cent, and restaurant meals. Moneris data shows some sectors saw an increase in sales over the first month. Children and baby apparel stores saw an eight per cent bump in sales, while the size of the sales remained unchanged. Family clothing stores experienced a modest two per cent growth in transactions, while overall transaction counts dipped by four per cent. Hobby, toy, and game stores had their sales decline by five per cent, while the number of transactions went unchanged. One sector that was projected to have the biggest boost as a result of the tax holiday was restaurants and fast-food establishments. Restaurants saw their amount of transactions dip six per cent, while fast-food only saw a slight fall by one per cent. Those eating out also seem to be spending less, with transaction sizes while eating out down five per cent at restaurants and eight per cent for fast food. “The tax holiday brought growth to certain sectors, but for restaurants and fast-food establishments, the story was different,” says McCormick. “Our data shows a decline in both transaction count and average spending, likely reflecting post-holiday budget tightening. This is a good reminder that consumer behavior varies widely by category, and tax exemptions may not deliver a universal lift.” Retail analyst Bruce Winder admits he was surprised at the data compiled by Moneris. “I think what this really shows is just how fragile our economy is right now and how fragile consumer spending is right now,” says Winder. He says many Canadians still have a great deal of debt and can’t afford to make inessential purchases even with the tax break. He says other factors contributing to the lack of spending include the ongoing political turmoil in Ottawa and the tariff threat from President Donald Trump. Winder notes poor execution by the federal government in rolling out the tax holiday also led to a lack on increased spending. “Some consumers had already spent their money for the holiday on some of the non-restaurant items,” Winder says. ““I think it missed the mark. I think it was designed politically to give Canadians a bit of a sweetener before an election and I think Canadians saw through that. “Is it a failure? Is it a success? I can’t see it being a success.” New Brunswick Premier Susan Holt has previously stated the tax break will cost her province $62 million in lost revenue. “Conversations with the federal government are ongoing,” press secretary Katie Beers told CTV News Atlantic in an email Thursday, referring to efforts to recoup the lost dollars for the province. “As we see the economic winds chilling in the ongoing tariff battle, it’s more important than ever that New Brunswick gets reimbursed.” Emma Fifield is a supervisor at the Cask and Kettle in uptown Saint John. She said it has been hard to judge if the tax break is bringing more traffic in the door with December always being a busy month at restaurants. She adds the month of January felt similar to years past in terms of customers. If anything, Fifield said there may be a slight uptick in sales but she isn’t sure if that is because of the tax break or the strong support the restaurant typically sees from the community. “There’s so many variables that it is really tough to say,” Fifield admits when asked if the tax break is bringing in additional traffic. “Particularly this year it has been pretty steady. It’s hard to say if that was from the tax break or just generally support from the community, understanding that this is a tough time for businesses in general and wanting to support particularly local businesses.” When asked if she would like to see the tax break extended, Fifield says as a consumer, anytime you can save a few dollars it’s welcomed. The tax break runs until Feb. 15. Until then, there will be no HST or GST (depending on which province you reside in) charged on various items.
