Boxing Day shoppers lured by tax break say it's still not enough amid cost of living crunch

Shoppers flocked to malls on Thursday to take advantage of Boxing Day deals made more enticing by the federal government's GST holiday, but some say the lower prices aren't enough to keep up with the country's cost of living.

For two months, a slew of items including children's toys, video games and consoles, snacks, wine and restaurant food are GST- or HST-free, depending on the province. The tax break has incentivized some consumers to take advantage of Boxing Day sales at their local retailers.

Nakul Singal said he came to Fairview Mall in Toronto on Thursday morning with his partner to hunt for deals.

"Every year, we generally get good deals," said Singal, who added he'd been waiting for Boxing Day to get new earphones. "It's good to shop around during this time."

He added that while the tax break has helped his family with food prices, he would like the government to do more to help Canadians with the high costs of living, especially housing.

"I hope that they could stop inflation," he said. "We are struggling right now."

"I expect it's particularly critical for apparel retailers because children's clothing is GST-free, and for toy retailers these are segments that ... didn't have a particularly good November," Greg Wilson, director of government relations for the Retail Council of Canada, told CBC News.

"So for those businesses that's going to be critical.

"And what we know is that our small apparel business members are, you know, this has been a tough year and they were looking forward to the Boxing Day sales and indeed to the holiday sales overall."

The vice-president of federal government relations for the Retail Council of Canada, Matt Poirier, told The Canadian Press last week that Boxing Day in particular is expected to get a boost amid the temporary break.

However, he said businesses, including ones with older payment systems, have faced hurdles trying to implement the tax break on short notice and even figuring out which items qualify.

An RBC Economics report from earlier this month showed retail spending slowed in November, with holiday spending slightly below 2023 levels over the Black Friday weekend. Spending on hobbies, toys and games scaled back notably after Nov. 21, wrote RBC economist Carrie Freestone — the day the tax break was announced.

"Typically, spending on popular children's gifts builds as the holiday season approaches," wrote Freestone.

But even with November's decline, Canada is likely on track for a slight uptick in per-person retail spending in the fourth quarter for the first time since mid-2022, she wrote.