CFIB's Atlantic analyst calls on PM to compensate businesses for tax holiday admin costs

A group that represents small and medium-sized businesses in P.E.I. and elsewhere across the country is calling on the federal government to offset its two-month tax holiday with support for owners.

The Canadian Federation of Independent Business wants Ottawa to provide those businesses with $1,000 in compensation to help them cope with the cost of the sales tax break from Dec. 14, 2024, to Feb. 15, 2025.

It's also asking for a commitment that business owners won't face penalties from the Canada Revenue Agency if they make errors in applying the reductions. 

Frederic Gionet, the CFIB's senior policy analyst for the Atlantic region, said businesses in P.E.I were surprised by the federal government's GST/HST holiday proposal, especially since it comes so close to the Christmas shopping season. 

"The complexity of implementing these kinds of changes at the last minute before the Christmas season is catching a lot of small businesses off-guard," Gionet told Island Morning's Laura Chapin on Friday. 

"A lot of people will be waiting until Dec. 14 to make their purchases. Even worse, some of them may return previously purchased products in order to take advantage of the rebate." 

On Thursday, the House of Commons passed legislation that will remove the federal sales tax for two months from a range of items, including children's toys, books, restaurant meals and takeout, as well as beer and wine.

In provinces where the federal goods and services tax (GST) is blended with provincial sales taxes to form the HST or harmonized sales tax, the province portion will also disappear for the two months covered.

The bill, which the Liberals and NDP agreed to fast-track through the usual procedural steps, now goes to the Senate. 

Gionet said Friday that 62 per cent of small and medium-sized businesses oppose the tax holiday, saying it will require them to change their point-of-sale systems and retag eligible items, then change everything back when the tax comes into effect again after Feb. 15. 

Since the list of eligible items is quite long, he said owners are worried about making mistakes and getting trouble with the Canada Revenue Agency.

"They believe that the cost… and the risk they're incurring may just not be worth it. They're quite suspicious about it," Gionet said. 

"Something more permanent would be a lot better so the investment into changing all these things would be worthwhile, more than just two months and then having to revert to the original setup." 

Speaking to Island Morning host Mitch Cormier on Friday, Prime Minister Justin Trudeau did not commit to compensating business owners or exempting them from penalties.