Was the federal tax holiday successful? Early numbers say not exactly: experts
The tax holiday ends Feb. 15, after 2 months of savings for shoppers
As the federal government's tax holiday comes to an end, some experts and business owners say it wasn't worth the extra work it put on businesses — even if some numbers suggest that spending increased slightly over the last few months.
The two-month GST/HST holiday began on Dec. 14 and was touted as a way to give Canadians a break on the cost of some essential goods.
But some numbers and early assessments indicate that spending during the holiday season was modest and people weren't putting money away either, says Moshe Lander, an economist professor at Concordia University.
"There was an increase of 0.1 percentage point where [forecasters] were expecting GDP to come in flat, but remember that 0.1 of a percentage point is hardly anything to get excited about," Lander told CBC Toronto.
That small change in Canada's GDP may indicate that people were spending more. However, it could take weeks or months to get a better picture of what people were spending or putting away during the tax holiday, Lander says.
For some business owners, he says the cost of implementing the tax break may have outweighed the benefits.
According to polling by the Canadian Federation of Independent Businesses (CFIB), the average small business spent $1,000 reprogramming their point of sale systems, and the list of tax-free items was confusing.
"It was a major, major headache," said Dan Kelly, CFIB president.
"That list was as confusing as sin. It was really hard for businesses to make heads or tails of which products it would apply to … One type of doll would be taxable, another type of doll would not. It made very little sense on a whole bunch of fronts," he said.
For Trinh Ngo, the owner of Juxtapose Cards & Gifts in the Annex, the timing of the tax holiday added an extra layer of stress at the worst time possible.
"There was no break," she told CBC Toronto. "Two weeks before Christmas, for our gift store — it's our busiest time."
Ngo says she didn't see an uptick of sales either.
A spokesperson for the Ministry of Finance told CBC Toronto that its data on spending during the tax holiday is not yet available.
Shoppers have mixed reviews
Some shoppers say the GST/HST break didn't change their habits much.
It was sometimes an incentive to get a sweet treat, Mark Foran says, but nothing beyond that.
Others, including Meredith Kay, say the tax holiday encouraged them to visit restaurants more often.
"It's certainly a nice benefit to be able to save a little bit of money and it did get us to go a few more times," Kay said. "It's been great."
More food service jobs added during tax holiday: StatsCan
A recent Statistics Canada survey found that employment in the food service sector increased to its highest level since the start of the pandemic, with 34,600 new jobs since November. Kelly Higginson, president of Restaurants Canada, credits the GST/HST break.
"The data shows the reality is it had a really positive effect across the country," she said.
"We had really low consumer confidence as we went into December. We were very concerned," Higginson said.
"The GST holiday is doing what it was supposed to do and that's to stimulate Canadians to get out and be able to afford some of these small things that they've cut back on over the last year because of the affordability crisis."
Not all restaurants saw those positive results.
At Mildred's Temple Kitchen, business was "pretty status quo" says owner Donna Dooher.
"A lot of the consumers weren't even aware that they were getting a tax break, which I kind of chuckled about," she told CBC Toronto.
"We didn't see the uptake that we hoped we would."
ABOUT THE AUTHOR
