Did the two-month GST holiday make a difference for Canadian businesses?

With the GST tax break set to come to an end on Saturday, Allison Bamford explores whether Canadian small businesses benefitted.

Ottawa’s temporary GST and HST holiday was touted as a tax break that would put more money back into the pockets of Canadians. Though the two-month tax break might have benefitted some consumers, it was a flop for many small businesses.

“If anything, it just led to more confusing conversations with our customers in-store who thought it applied to everything,” said Cole Thorpe, owner of Saskatoon clothing store Prairie Proud.

Ottawa temporarily paused GST and HST on certain items from Dec. 14 to Feb. 15, one of the busiest times of year for retailers.

“The holiday season, it’s always a stressful time for a small business owner and his staff. And this just added one more thing to worry about, which just wasn’t ideal,” Thorpe said.

Only five per cent of small businesses saw stronger sales compared to last year at this time, according to new data from the Canadian Federation of Independent Business (CFIB). Seventy per cent reported no real change in spending or sales.

Ryan Mallough, vice president of legislative affairs with the CFIB, said a policy that looks good on paper doesn’t always translate into practice.

“We found that it was a little bit of a miss on the policy side,” Mallough said.

“At the beginning, it was a monster headache on the eve of a very important season for a lot of small business owners. Getting those point-of-sale machines and figuring out what products the holiday applied to was a bit of a Herculean task.”

In some cases, stores spent hundreds of hours checking inventory, line after line, to see what items applied. Other businesses spent upwards of $1,000 on IT support to get new systems into place.

For some retailers, the daunting task was worth it.

Quentin Nordick owns 8th Street Quentin’s Comics and Toys in Saskatoon. His store saw sales increase marginally as more products went out the doors in the last two months.

“People were really receptive to it,” Nordick said.

“I even had a few customers where they actually told me that that’s why they came in for that item.”

The hospitality sector benefitted the most from the GST break, according to the CFIB, with about 15 per cent of the industry reporting an increase in sales from the previous year.

But at Saskatoon’s High Key Brewing, management didn’t see a noticeable change in sales during the tax holiday.

“At the start, we were really hoping that it might get people out to spend some more money,” said taproom manager Joel Kennedy.

After crunching the numbers, it turned out to be a letdown. Kennedy thought the shop local sentiment in response to the trade war would drum up more business than the GST break did.

“Over the last couple weeks, we have noticed a bit of a change in how busy our days and nights have been,” he said.

Small business owners say it should be less of a headache to reverse the GST holiday in their systems.

The CFIB worries the reversal may be seen by shoppers as a price hike on products and wonders what effect it may have on consumer spending going forward.