The federal government’s GST/HST holiday kicked off Saturday, and while some in the food industry hope it will lead to a boost in sales, shoppers are unsure whether it will encourage them to spend more.
The tax break removes the GST on prepared food, toys, some types of alcohol and other holiday season staples.
In provinces like Ontario, where the provincial and federal sales taxes are blended together into a harmonized sales tax, the entire HST will be removed from such items.
Some people shopping in Mississauga on Saturday said they welcome the savings but didn’t think the tax break would make a significant difference for their wallets.
Anna Fonscea said she’s thinks the affordability issues people are facing need more long-term solutions.
“It’s not gonna solve the issue, especially when people are having so many difficulties now. It’s just a quick fix for Christmas basically,” she said.
She said she’s already on a tight budget so the tax break won’t encourage her to dine out or shop more, either.
“I mean, this is only good for two months and then after that, who knows what’s gonna happen? Then might prices might go up.”
Roman Wojnarski said he wasn’t sure if the tax break would lead to more shopping or dining out, but supported the initiative.
“I think right now the economy is such that this is going to be a bit of relief for a lot of people.”
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Industry group Restaurants Canada estimates the tax holiday could lead to an additional $1.5 billion in sales for restaurants across the country.
It’s a much needed win for the restaurants which usually see a dip in revenue after the holiday season and often operate on a razor-thin profit margin, said Kelly Higginson, president and CEO of Restaurants Canada.
“It really does help them with that stability and predictability over the two-month period.”
However, some small businesses have said the GST break has created more headaches than its worth during their busiest time of the year, including hours of extra work editing barcodes and reprogramming sale systems while also creating confusion over which products are eligible.
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Canada’s Small Business Minister Rechie Valdez said she recognizes that the GST break has created challenges for some businesses which is why the Canada Revenue Agency created an online tool and hotline to help.
Valdez said the CRA will take a “practical approach” to enforcement and won’t go after businesses that make reasonable efforts to comply with the legislation.
“As long as small businesses do their best to comply with the legislation and demonstrate their ability to be able to do that, then the Canada Revenue Agency will not focus on them in terms of compliance,” she said at a news conference Saturday in Mississauga about the start of the GST holiday.
“We just expect small businesses to do their very best because this is not just going to benefit their business.”
But other business owners said preparing for the break was straightforward.
Paul Tavora, who owns Tavora Foods where Saturday’s news conference was hosted, said he was worried at first but got a software programmer to help him make a few changes to his store’s sales system to comply.
“It was just a matter about going to our sub categories that have those items that carry the tax and click a few buttons takes the tax right off,” he said.
Tavora said he’s hopeful the initiative will lead to more sales while also helping his customers.
“We’re very excited with this plan to help save families and make their money stretch a little bit further. I think in all aspects this is going to help.”
The tax break period lasts until February 15, 2025.