Canada’s Senate approved the Liberal government’s GST/HST tax holiday bill last Thursday amid criticism that Bill C-78 was considered a done deal before the Senate could vote on it.
Senator Lucie Moncion introduced third and final reading of the bill on Dec. 10, but the Senate did not vote on it and pass it until Dec. 12, giving businesses a day to remove the GST from applicable items.
Fifty-eight senators voted in favour of the bill and 22 voted against it, with three abstentions.
Days before the Senate voted on the tax-relief measure, politicians and some media spoke about it as though it had already been enshrined in law. And many businesses were in the process – perhaps with some cost to them – of preparing to remove the tax from applicable items.
Before a bill can become law in Canada, it must be approved in the Commons and in the Senate then be given royal assent (approval by the Governor General).
Irrespective of the benefits the tax holiday could deliver, senator Percy Downe addressed the legislative process, calling attention to the perception that the bill was fait accompli before it was law, that Liberal MPs had been “advertising” the tax holiday and that prime minister Justin Trudeau had tweeted five days earlier that Canadians would pay less for groceries at the cash register. Downe asked how Trudeau could know how senators would vote.
“Don’t you think it’s an affront to the Senate that Liberal MPs are currently running ads indicating that we’ll have a tax break on December 14 before the chamber has actually voted?” said Downe on Dec. 10 during debate on C-78. “If that’s the case, are we not participating in a bit of a charade here, with people standing up with good intentions, giving speeches and making remarks? It’s all a sham. Would you share that concern, given that there are public ads appearing across Canada saying that on December 14 we will have a tax break?”
Moncion said it’s a “very good question” and that although she doesn’t know what Trudeau was thinking with regard to the bill, he likely “presumed” senators would vote in favour of it.
She added that the Standing Senate Committee on National Finance did a thorough review of the bill as it was not “looked at” in the House, and heard from many stakeholders who were in favour of the tax holiday.
The committee had heard from 18 witnesses, including retailers, grocers, restaurants, a think tank, academics and the Parliamentary Budget Officer.
Moncion said the bill is intended to relieve Canadians of some of the financial pressures they’ve faced since the pandemic while at the same time boost consumer spending to stimulate the economy.
“We know that this is having a very real adverse impact on the wider economy. Despite inflation having cooled and interest rates dropping, per capita consumer spending remains subdued, and the Canadian economy is operating below its potential capacity,” she said. “To address this very real challenge, Bill C-78 offers a solution. … As we have discussed, we note that there is a sound theoretical basis for this sort of support. Government interventions in the economy under the right conditions — for example, through measures like government support or tax reduction — can result in a positive shift within the economy and boost consumer spending.”
From Dec. 14 to Feb. 15, 2025, the GST is exempt on items such as children’s clothing and toys, diapers, car seats, video game consoles, controllers or physical game media, print newspapers and books and Christmas trees (natural or artificial), as well as 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 and beverages sold at restaurants and coffee shops.
For a full list of GST/HST exempt items, visit www.canada.ca
