Nova Scotia shoppers, businesses hoping brief tax holiday provides break

A Halifax business professor says he expects the two-month GST holiday will help retailers and consumers alike but not in a substantial way.

Last month, the federal government announced a pause on charging GST on items such as toys, alcohol and restaurant meals starting on Dec. 14. The tax vacation will remain in effect until Feb. 15, 2025.

An article released by accounting firm Deloitte indicates that the average Canadian household will spend approximately $1,478 this year on Christmas shopping. That's up from last year's $1,347 but still lower than a peak of $1,841 in 2021.

Ed McHugh, who teaches at Nova Scotia Community College and Dalhousie and Saint Mary's universities, said big-box stores stand to benefit most from increased consumer spending as a result of the GST break, as businesses like Walmart and Amazon are so entrenched into shopping habits. 

He said that's because these retailers have massive Black Friday sales leading into the holidays, something small local stores are not able to compete with.

"But I do think all merchants, all retailers do stand a bit of a chance here of, you know, having some improved bottom line," McHugh said. "But I think the bigger stores will clearly get the bigger advantage here."

Due to Canada's high inflation rate and high cost of living, many lower- and middle-income families are looking for any relief at the checkout, he said. He sees the GST holiday providing a nice break to consumers, hopefully meaning a small bump in spending.

However, McHugh said starting the GST break so late in December will likely mean some unusual trends for the holiday shopping season.

He said the 2024 Christmas shopping bump was already expected to be shorter than in previous years because North Americans tend to begin most of their shopping after American Thanksgiving, which was five days later than average this year.

The impending GST holiday might have delayed Christmas shopping even more, which McHugh said could hurt small businesses.

"December's been OK. It's been a little slower than normal for the first part and it kind of picked up on the 14th when the GST holiday went into effect," said Joshua Pyle-Carter, owner of the Deck Box in Halifax.

Pyle-Carter sells new and old video games, along with a vast selection of trading cards and other collectibles. 

"And with this, we sort of saw a fair bit of people, you know, telling us that they were going to wait till the 14th to kind of try to cram it all in at the end," Pyle-Carter said.

He said several regular customers were planning to hold off on bigger purchases, such as expensive gaming consoles, until the discount would be applied.