The name of the bill says it all: the Tax Break for all Canadians Act. It’s a federal Liberal government bill to remove the GST on selected items in stores for all Canadians — including upper-income earners and the wealthy, who don’t need a tax break — for a two-month period, beginning Dec. 14.
It’s bad policy on so many fronts, it’s hard to know where to start. For the most part, it’s a desperate — and likely ineffective — political scheme by the minority Liberal government to cling to power as it enters an election year.
The tax holiday bill passed the House of Commons Thursday night after weeks of procedural wrangling in Parliament.
It covers some items, but not others. It includes wine, beer, candy, children’s toys, video games and consoles, Christmas trees and catered meals. It’s an arbitrary list calculated no doubt to score as many political points as possible with voters.
According to the government, it will save someone who spends $2,000 on eligible items between $100 and $260, depending on where they live in Canada (some provinces harmonize the GST with their own sales tax, others don’t).
And it will cost the federal government an estimated $1.6 billion. It’s not a huge hit to the federal treasury. But for a government that has never balanced the books since taking office in 2015 and is currently running a projected deficit of $46.4 billion in 2024-25 (according to the parliamentary budget officer’s latest estimate last month), it’s another example of the Liberals’ reckless fiscal record.
Mostly it’s just really dumb policy. If low- and middle-income Canadians need financial relief after nearly two years of punishing inflation and high interest rates, government should target them specifically, not give broad-based tax cuts to upper-income and wealthy Canadians.
It’s the same reason the provincial NDP government’s gas tax holiday makes no sense (that one is actually worse, because most low-income Manitobans don’t even own vehicles).
There are plenty of ways to give lower-income Canadians relief through existing measures, such as the GST tax credit. But that’s not the federal government’s objective here. Its objective is to try to buy votes from as many Canadians as possible, regardless of income level, by using political rhetoric such as: “The government can’t set prices at the checkout, but we can give Canadians more money in their pockets… to help them buy the things they need and save for the things they want.”
It’s utter nonsense.
And it likely won’t work. Most Canadians see through these pre-election ploys. It won’t change voting patterns.
Even the dates of the tax holiday make no sense. The tax exemption doesn’t kick in until Dec. 14, long after many have already started their Christmas shopping, including Black Friday and all the sales around it this weekend.
At best, it may shift some shopping into the tax-free period. But because the savings from the temporary tax break are so small, sales and other pricing shifts will likely have more impact on shopping patterns than the tax holiday.
Probably the biggest harm it will cause is to small and medium-sized businesses who are now scrambling to make the necessary changes at their checkouts. As if they haven’t been punished enough from the COVID-19 pandemic (if they even survived it), they’re now having to deal with the hare-brained scheme of taking the GST off items at the cash register, only to add it back on two months later. For many, it’s an administrative nightmare.
According to a recent Canadian Federation of Independent Business survey, 75 per cent of CFIB members said the tax holiday will be costly and complicated to implement, while 65 per cent said there isn’t enough time to implement it.
The majority said some people may return products they purchased outside the tax holiday period and buy them again when the tax cut applies, adding unnecessary and unanticipated work to their businesses.
“Small firms — particularly those in retail — do not have the time or resources to effectively make the changes to accommodate this temporary change and very few believe there will be any net benefit,” CFIB president Dan Kelly said in a news release Thursday.
This likely won’t be the last desperate attempt by the federal Liberals to change their political fortunes as a 2025 election looms. Unfortunately for them, none of it will work. But it will cost Canadians. In this case, it will hurt small and medium-sized businesses the most.
tom.brodbeck@freepress.mb.ca
Tom Brodbeck
Columnist
Tom Brodbeck is a columnist with the Free Press and has over 30 years experience in print media. He joined the Free Press in 2019. Born and raised in Montreal, Tom graduated from the University of Manitoba in 1993 with a Bachelor of Arts degree in economics and commerce. Read more about Tom.
Tom provides commentary and analysis on political and related issues at the municipal, provincial and federal level. His columns are built on research and coverage of local events. The Free Press’s editing team reviews Tom’s columns before they are posted online or published in print – part of the Free Press’s tradition, since 1872, of producing reliable independent journalism. Read more about Free Press’s history and mandate, and learn how our newsroom operates.
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