Finance Minister Chrystia Freeland acknowledged Wednesday night that deciding which items qualify for a GST holiday under Bill C-78 was “really hard,” as senators criticized the perceived inconsistencies in the government’s selections. Blacklock's Reporter says the Senate national finance committee questioned the rationale behind tax breaks on items like video games and soda while leaving children’s sports equipment and Christmas tree decorations taxable.“We got advice,” Freeland told the committee. “We started with food, groceries, anything that we eat. We did that because we understood when we speak of affordability, this is where we have to start.”Bill C-78, titled An Act Respecting Temporary Cost Of Living Relief, introduces a 60-day GST holiday on select goods from December 14 to February 15, at an estimated cost of $1.6 billion. However, senators raised concerns about the logic of the exemptions, with Sen. Claude Carignan (Que.), the committee chair, calling the list arbitrary.“I’m trying to understand the logic behind the goods selected for the tax holiday,” said Carignan. “It includes a Christmas tree but not the decorations you put on the tree. It’s very sad to see a Christmas tree without any decorations.”Carignan highlighted other anomalies: “Bill C-78 suspends the tax on potato chips but not children’s sports equipment. It taxes real guitars but suspends the tax on toy guitars. I can get a tax break to buy shoes but not ballet shoes. Anything that has to do with sports or the arts is excluded.”“Who was in charge of this list?” asked Carignan. “What is the logic?”“There is a pragmatic approach,” Freeland replied. “You are right, it was really hard to decide what would be included in the bill.”The GST-free items listed under the bill range from Christmas trees, beer, and wine to candy, chips, video game consoles, children’s clothing, diapers, dolls, pastries, and take-out meals.Dan Kelly, CEO of the Canadian Federation of Independent Business, warned that the bill creates a “logistical nightmare” for small businesses.“A hobby store owner told us he has 3,500 items,” Kelly testified. “He has to go through every single one of these and make judgment calls on which ones will be exempt and which ones will not.”He cited examples of the confusion: “The model plane for a child is exempt. What about the glue that holds the plane together or the paint you apply to the plane afterwards? Are those exempt? There were no answers.”Kelly added that even wineries are struggling to interpret the law. “For example, wine tasting. The Department of Finance told us it is actually just the wine that is exempt, but the winery doesn’t disaggregate the price to the consumer, so how are they to possibly charge that?”Freeland acknowledged the challenges but stood by the bill’s intent to address affordability during the holidays, while senators continued to press for clarity and consistency in its implementation.
