What the GST holiday means for consumers — and why some economists are worried

After the federal government announced on Thursday that it would introduce a holiday season tax break on some goods, some Canadians welcomed the move, while others said they saw right through it.

"I think it's going to be helpful for some people, which is really nice," said Leemor Valin, who was shopping in Toronto.

"I really feel strongly that part of what makes this country so amazing are all the services we provide to all different kinds of people," she said. "So I'm happy to pay taxes myself. I think that it's really important, but I'm happy to hear [that] maybe it'll help some people in tougher times."

In addition to the GST holiday, the federal government plans to cut a $250 cheque for working Canadians who made $150,000 or less in 2023, starting sometime in the spring. But Jack Knight, who was shopping at Vince's Market, the grocery store in Sharon, Ont., where Prime Minister Justin Trudeau made his announcement, said the policies are "just bribery."

"All these parties do this. When it comes close to the election, they start handing out the gold bars," Knight, a resident of Barrie, Ont., said. "It doesn't wash with the public, I don't think."

On Thursday, the federal government announced that it would slash the GST on some eligible goods and services — prepared foods, restaurant meals, children's toys, books and Christmas trees, among other items — between Dec. 14 and Feb. 15, 2025.

Lisa Amato, who was shopping at Vince's Market, said it was too little, too late, and that the government should consider cutting the tax forever, "or at least until the economy improves." But Marilyn Reid, a senior who described herself as tired, said it would definitely help her with her shopping.

When Canadians start taking advantage of the two-month tax break, some small businesses say it will give them a much-needed holiday boost during a weak year for consumer spending. A handful of economists, meanwhile, worry about what a spending rush will mean for the economy.

Standing next to a wall of colourful stuffed animals, Toronto business owner Sam Care said she's glad about Ottawa's move — and expects a chaotic rush of shopping at her toy store, Playful Minds.

"People are looking for deals," Care said. "The economy is, you know, it's tougher out there for a lot of families. And I think families are really going to take advantage of this."

She has a few questions about the impact on her business: Will her store be empty until Dec. 14? Will she have to adjust her staffing schedule? How much inventory will she need?

"If it's only going to be a two-month period, are people going to stock up or buy now for later? I don't know. Everything is up in the air right now," Care said.

Dan Kelly, president of the Canadian Federation of Independent Business, said in a statement that the organization welcomes any tax-cutting measure. But he said that "narrow, temporary sales tax holidays can add confusion and administrative complexity for small business owners."

"While a temporary sales tax cut will help boost demand in some sectors, like restaurants, in the slow post-holiday period, Canadians and Canadian businesses really need permanent tax relief," Kelly's statement said.