Tuesday, December 3, 2024

Tax holiday on GST will be more work than it’s worth, smaller retailers worry

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Prime Minister Justin Trudeau and Chrystia Freeland, Deputy Prime Minister, visit Vince’s Market, a grocery store in Sharon, Ont., on Nov. 21, 2024, the day the federal government promised a GST break on a range of goods. (Credit: Chris Young)

Thousands of small businesses have big concerns and bigger questions about the upcoming two-month GST/HST holiday, according to a recent poll by Canadian Federation of Independent Business (CFIB).

Last week, the Trudeau government promised to make dozens of items tax free between Dec. 14 and Feb. 15, ranging from children’s clothing, toys and video games to Christmas trees and restaurant meals and more. The tax holiday bill is one step closer to becoming law after it was passed by a majority of the House of Commons late Thursday night.

The Conservatives and Bloc Québécois voted against the legislation.

The plan has been welcomed by some, but others see it as a desperate attempt by the struggling Liberals to win votes. The CFIB polled its members on the upcoming tax holiday and heard back from 3,500.

Three quarters of respondents said it would be costly and complicated to implement the holiday — small firms reported a median of $1,000 in additional costs to reprogram their point-of-sale systems to remove and then reinstate the tax.

Sixty-five per cent said there is not enough time to implement the change.

Seventy-one per cent said big businesses and online giants will benefit most from the holiday.

As well, more than two-thirds said it will be difficult to determine which items are temporarily tax-exempt. Most provinces don’t require labelling telling consumers which items are taxed.

Sixty-six per cent said they believe consumers will delay purchases and 54 per cent believe consumers will return products to repurchase during the holiday period.

“Small firms — particularly those in retail — do not have the time or resources to effectively make the changes to accommodate this temporary change and very few believe there will be any net benefit,” said CFIB president Dan Kelly in a statement. 

On top of the GST holiday, the federal government had also planned to send out $250 cheques in the spring to working Canadians who made $150,000 or less. But the opposition wouldn’t support the plan. The Bloc wanted seniors included and the New Democratic Party also wanted cheques sent to students and people with disabilities.

The four Atlantic provinces and Ontario have a harmonized sales tax, which means the entirety of that levy — 15 per cent in the Atlantic and 13 per cent in Ontario — will be lifted. For the rest of the provinces only the five per cent GST will be lifted on exempted items. 

Wendy Friedman owns The Independent Mercantile in Halifax. She appreciates the offer of limited help for consumers and retailers but doubts her business or many others will really benefit.

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