In what Canadian economist Pedro Antunes calls a “strange measure,” the federal government proposes a “tax holiday” from Dec 14, 2024 to Feb 15, 2025 that exempts people from paying sales tax on certain items. It sounds nice in theory, but there are many nuances to this short-lived measure, and some argue it will make little difference for Canadians. In Nova Scotia, the bill will have a greater impact than, say, in Alberta, where we pay 15% in combined HST/GST compared to Alberta’s GST only.
The tax vacation applies to a set list of goods: food items such as candy, baking ingredients, ready-made and restaurant meals, alcohol (restrictions on % ABV), books, children’s toys, clothing and shoes (large-footed children need not apply – limits are placed on insole length), diapers, car seats, newspapers, Christmas trees, jigsaw puzzles, physical games and video games (excluding CD-ROMs, so don’t expect a discount on The Oregon Trail – oh wait, it’s 2024).
Quirks aside, some have criticized the proposed tax break as a political tactic that doesn’t offer relief to society’s most vulnerable. Michael Higgins, co-owner of Lunenburg Bound Books and Good Dog Books, says that even though it gives his customers a slight discount, the people who can afford books and puzzles are not the ones who need government relief most.
“This is not going to alter the lives of people struggling with food and housing insecurity,” says Higgins. “It feels a little tone-deaf.”
For families with young children and infants, the tax break may offer some relief, particularly regarding diapers and clothing. Grocery items are more negligible. Fresh Cuts Market Owner Andrew Langille said nearly all of the basic groceries in his store are tax-exempt anyway.
With restaurants and beer on the list of tax-free items, the tax vacation will impact those inclined to frequent their favourite eateries over the holidays. Chris Penney, manager at Bar Salvador, says he hopes the tax break: “brings more people out, but I understand that even with the tax break, many can still not afford to eat at restaurants.”
Some businesses nationwide have cited expensive labour costs to reprogram POS machines, but Penney says it is a relatively simple process for them. However, many local restaurants close their doors in the winter months because the labour costs exceed any profit earned, and therefore will not benefit from any potential increased business from the tax break.
Over at Naugler Family Trees, Matthew Naugler speculates the tax break will have little impact on people’s tree-buying traditions. And most local tree-selling businesses have such a short season that they make less than $30,000/yr and are not required to charge HST. The same goes for some smaller secondhand and consignment businesses.
For those who can take advantage of the tax break, several local businesses, restaurants, and general stores will offer tax-free goods over the next two months. Find out what’s included and not on the Government of Canada website.
