GST-Holiday brings mixed feelings, hurdles for local businesses
On December 14, 2024, a temporary GST/HST break had been implemented by the federal government. Local businesses shared their mixed feelings on the tax break rollout, with multiple citing a lack of effective guidance and help from the federal government as a significant hurdle in its implementation.
Prime Minister Justin Trudeau explained that since the government could not set prices at the checkout, by applying the tax break, the government could give Canadians more money in their pockets to help them afford the things they need and save for the things they want.
Many of the key items that are now exempt from GST/HST include prepared foods and snacks, dining at restaurants, take-out or delivery, beverages such as beer, wine, cider and ready-to-drink alcoholic beverages with seven per cent or less alcohol by volume, a variety of children’s products and entertainment, and seasonal items like Christmas trees.
Chute-à-Blondeau (CàB) Café owner Élisabeth Arbaud explained that “we didn’t get any emails or anything else. I heard about it, I think on the news, and then looked into it myself. My first concern was also having to go through my different products and manually take the tax off.”
Arbaud said, “I don’t think that this exemption was done to help small businesses; it’s completely politically orientated. I don’t think it had anything to do with ‘Oh, let’s get loads of people through the doors of small businesses.’ I worry that when the taxes get added back on, people are going to say, ‘You put your prices up,’ which isn’t the case.”
Tom’s Pantry owner Tom Manley in Alexandria shared that “this tax holiday is a real pain for small businesses. I have many time-consuming and annoying tasks right in the busy Christmas season.”
“I have to go through the sale items on my cash register and my online e-store to change the tax code for a range of products, train my employees on the subject, explain things to customers, and what is taxed and not,” Manley continued.
READ: Tax holiday boosting spending at retailers, restaurants: industry groups
Déjà Vu Bar & Grill owner Tony Tsourounakis in Hawkesbury explained that the first hurdle faced was when his staff had to reprogram the point-of-sale system to reflect the tax changes, “even when they weren’t clear on what was exempt or not. We had to go in and flag individual items rather than a blank removal of the tax.”
“We didn’t receive direct communication, a letter, or anything like that outlining what was covered under the exemption. If it wasn’t for restaurant organizations or my own research on the internet, I wouldn’t know what I was doing,” Tsourounakis explained.
The Canadian Federation of Independent Business (CFIB) stated on its website that they had “hundreds of calls from business owners worried about the implementation of the GST/HST holiday. Many are worried about making a mistake in interpreting the rules, especially given the rushed nature of the change.”
They further cited that owners should not stress if they make a mistake, “especially given the rushed nature of the change. The entire initiative has been poorly designed and rushed.”
The CFIB clarified to its members that the “main risk to businesses would be collecting GST/HST and NOT remitting it to the government. Even if collected in error, remit all GST/HST to the CRA as normal.”
Additionally, through a flash member survey between November 26 and 27, the CFIB found that “only four per cent of small businesses expect stronger sales as a result of the holiday. The majority of small businesses are opposed to the measure, including 62% of respondents that will be required to implement it.”
“I don’t think people are spending more. I don’t think so at all,” Arbaud said.
Tsourounakis mentioned that he would like to see the federal government do more for small businesses, “around election time, we hear about how important small businesses are for the economy, they’re the engine of the economy, and et cetera, but at the same time, I feel that not enough support is given to these small engines of the economy. If the governments truly believe this, they would implement strategies to benefit small businesses.”
“There could be a benefit to small businesses if consumers use their HST savings to spend more locally… rather than reduce their household debt. But we do not know that yet; we will have to wait to see the economic statistics after the fact,” Manley concluded.
The GST/HST holiday is scheduled to end on February 15.
