After federal MPs gave the green light to a GST/HST tax holiday in the house in late November, senators last week twice gave their stamp of approval to the temporary measure that will provide some relief to Canadians on items such as taxable food, children’s clothing and toys, beer and wine, and restaurant meals.
The senate approved second reading and completed a committee review of Bill C-78, the Tax Break for All Canadians Act, on Dec. 3. Third and final reading is expected to take place on Dec. 10.
“This measure will benefit each and every Canadian, without exception, by allowing them to save money on essentials like food, baby diapers and children’s clothing and shoes. This tax relief will also act as an incentive to purchase products that are especially popular during the holiday season, like toys, alcoholic beverages, and restaurant and takeout meals,” said senator Lucie Moncion, who moved second reading of the bill. “Companies also stand to gain from the measure through increased patronage after the holiday season, when business usually slows down.”
If passed, the GST/HST tax break will take effect on Dec. 14 and last until Feb. 15, 2025.
The legislation will remove tax from items including children’s clothing, diapers, car seats, toys, video game consoles, controllers or physical game media, print newspapers and books and Christmas trees (natural or artificial), as well as from food and beverages including wine, beer, cider, coolers and sake (spirits excluded), bottled water, carbonated beverages, candies, chips, popcorn, salted nuts, seeds, granola, dried fruit, juice bars, frozen yoghurt, ice cream, fruit bars, cakes, muffins, pies, pastries, cookies, brownies, pudding, prepared salads, sandwiches, cold cuts, and food/beverages sold at restaurants, coffee shops and lunch counters.
Some business owners in Gimli said last week that they’d welcome the tax holiday as it will benefit consumers.
“I think it’d be great for customers to get a break on tax. They would have five per cent less to pay when they come in for a meal,” said Melanie Specula, Gimli Chicken Chef owner and former co-chair of the Gimli Chamber of Commerce. “I’m happy for our customers.”
In addition to meals being exempted from the GST, alcoholic beverages that Chicken Chef serves – beer and wine – will be exempted from the federal tax.
Specula said there might be businesses out there that could be “driven crazy” by having to adjust the tax on eligible products through their point-of-sale systems, but for Chicken Chef it will be “easy-peasy.” When Chicken Chef staff tally up customers’ bills, they can simply hit two buttons – tax exempt then GST – on the restaurant’s POS terminals and, like magic, the five per cent will vanish.
As to whether or not the government might require merchants to track their GST exemptions, Specula said she hadn’t heard anything of that nature and “nobody has told me that I have to track it.”
Specula said she isn’t anticipating any savings on food that she purchases for Chicken Chef over the course of the tax holiday, and the restaurant also does all of its baking in-house.
Like Chicken Chef, Gimli Pharmasave is anticipating having an easy-peasy time exempting the GST from many items the pharmacy stocks, including candy, beverages, toys, puzzles, a small selection of children’s clothing, diapers, printed newspapers, books and decorative Christmas trees.
“Our POS system will be updated by our head office and the changes will be applied automatically,” said pharmacist Melissa Jacobs. “The pharmacy won’t have to remove the GST on every item that falls under the exemption. But if there’s an issue, we can fix it at the store level.”
Someone who might need a holiday after the GST holiday wraps up in February is Scott Carman, who owns the Ship & Plough Tavern in Gimli.
“If the bill passes, I think it will be great for the consumer. The consumer will win. Everyone’s going to save a little bit of money,” said Carman. “However, as a small business, it will be a pain to implement this temporary change. We’ll have to re-program our POS system and then go in and re-program it again in February. It will be a bit of a headache.”
Because the tavern has taxes built into drink prices, but adds taxes on meals and on popular merchandise such as T-shirts, hoodies, pint glasses and pins, it won’t be a simple matter of exempting the GST from applicable items, which include food, beer, wine and cider.
When asked if he could get his POS system changed in a matter of three days from the time C-78 is expected to pass third reading in the senate and run his business at the same time, Carman said there are a few mornings when the pub is not open and he could take advantage of that time, but he also might need help from his POS supplier.
“It could take hours to change our POS system depending on what’s involved in changing it,” said Carman. “And if we need support from our POS supplier to change it – then change it back in February – there could be a cost to do that. It might be a bit of a nightmare.”
The tax break could bring more customers to the Ship & Plough over the duration of the tax holiday and, in turn, help entertainers who are scheduled to perform at the pub, including Cara Luft, who will be performing winter music and carols on Dec. 21, and blues artist Big Dave McLean, who will entertaining pub-goers on New Year’s Eve.
But Carman said he wonders whether the tax break will actually result in higher revenues for businesses, when all is said and done, or whether consumers will simply hold off on purchasing items they had planned to buy until the tax holiday is in effect.
“I don’t know how well thought out this [GST holiday] is. I don’t want to get political, but I’d rather see our government tax us less than give us rebates for GST and carbon and things like this GST hiatus,” he said. “It seems like an administrative nightmare. Maybe they can just lower our taxes a little bit. I think we’d all be better off with a longer-term tax measure.”
While small businesses await the senate’s final verdict, political sparring over the GST holiday bill continued last Friday with barbs exchanged between the NDP, which had supported the Liberal bill’s passage through the house, and the Conservatives, which had voted against it.
Assistant deputy speaker Carol Hughes had to crack down on both parties, telling them to “stop using adjectives” after phrases such as “Maserati Marxist” and “billionaire bootlicker Conservatives” echoed through the chamber, and opposition MPs served up several points of order, challenges to the chair (Hughes) and requests for quorum counts in an attempt – according to NDP leader Jagmeet Singh – to stop Singh from talking about the tax-relief bill.
Prefacing his remarks with a jab at the Conservatives, who “get upset” any time tax relief for the working class is spoken about, and expressing disappointment with Liberal prime minister Justin Trudeau for failing to stand up to corporate greed, Singh said he and the NDP want Canadians to experience the “Canadian dream,” which entails their ability to buy a house, have a fully stocked refrigerator and save money for trips.
To that end, Singh put forward a motion last Friday calling on the government to “permanently remove the GST from essential goods, including home heating, grocery meals, Internet and mobile phone bills, diapers and kids’ clothes,” as well as expand the Liberals’ proposed $250 Working Canadians Rebate to include people who did not earn employment income in 2023 such as recent graduates, retired seniors, people with disabilities, injured workers, and people on parental and sick leaves.
Singh said the $250 rebate, which the Liberals originally planned to deliver in spring, can be paid for “by putting in place an excess profit tax targeting the largest and most profitable corporations.”
Senators also debated Bill C-78, some speaking in particular about its negative impact on small businesses by way of possible expenses they’ll have to shoulder.
“As the sponsor of Bill C-78, do you know how many impacted small businesses or business associations were consulted with about the practicality of implementing a bill of this nature with very little lead time?” senator Krista Ross asked Moncion. “Are you aware that business associations are indicating it will have a median cost of over $1,000 to implement and that it will be very difficult to implement? What do you think of the administrative burden that will be largely shouldered by small businesses?”
Moncion said the government did not consult because of the short time frame between the date the bill was first announced and its proposed implementation date. Businesses will have to “adjust” to the change.
“As for the implementation costs, whenever there is a change in taxation brought by the government, it is assumed. It is a cost of doing business. It is the cost of compliance. This is how it is seen with the government,” Moncion added. “They do understand that there is an adjustment period. The adjustment period moving forward is longer than the adjustment period on February 15 when the tax measure reverses.”
Another senator asked why the government decided to temporarily relieve the GST on some alcoholic beverages, suggesting that January is a “very common time” when people try to quit drinking.
In response Moncion agreed that people “will probably drink less” in January.
