Federal government's two-month GST holiday begins

Power Play: Small business minister on GST holiday Small Business Minister Rechie Valdez discusses the GST holiday amid concerns from small business owners that it won't lead to higher sales.

As a two-month break from the federal GST took effect Saturday, shoppers and businesses expressed lukewarm support for the measure.

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 announcement wasn’t welcoming news when first announced.

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

“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.

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 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 Saturday.

Meanwhile, Jennifer Matthew said she forgot the tax break was starting on Saturday and didn’t factor that into her holiday shopping. She says the tax break on food, alcohol and clothing will help with some savings for her and her two daughters, but 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.

The tax break is set to run until Feb. 15, 2025, and it 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.

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

Kamal Khera, 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.

This report by The Canadian Press was first published Dec. 14, 2024.

With files from Joe Bongiorno in Montreal and Cassidy McMackon in Halifax.