Retailers say GST holiday failed to boost sales

A costly federal tax break meant to give holiday shoppers relief did little to help retailers, the Canadian Federation of Independent Business (CFIB) said.

Blacklock's Reporter says the temporary suspension of the Goods and Services Tax (GST) on select items, passed by Parliament at a price tag of $2.7 billion, failed to generate a meaningful increase in sales.

A survey of 2,345 CFIB members revealed that only 5% of small businesses reported stronger sales compared to the previous year, while 66% saw no change.

“By all accounts, the government’s GST holiday was a flop for small businesses,” the CFIB said in a statement. Many retailers faced logistical headaches implementing the tax break, particularly in programming point-of-sale systems and determining which products qualified.

CFIB CEO Dan Kelly called on the Canada Revenue Agency to provide leniency for retailers who made good-faith errors and to grant affected businesses a $1,000 credit to cover administrative costs.

The tax break was part of Bill C-78, which Parliament passed on December 12, suspending GST on a broad list of goods from December 14 to February 15.

Then-Finance Minister Chrystia Freeland described it as a way to help families struggling with the rising cost of living.

However, confusion arose over what items qualified. The list included Christmas trees but not decorations, tax-free toy guitars but not real ones, and exempted Pokémon cards while taxing hockey cards. “Who was in charge of this list?” Senator Claude Carignan asked at the time, criticizing its apparent lack of logic.

Kelly previously warned that retailers would face difficulties sorting out exemptions on items like Lego sets, dolls, and model planes.

“There were no answers,” he said, pointing to the challenge of determining whether accessories like glue and paint for model kits should be exempt.

Despite its intentions, the GST holiday left businesses frustrated, with many calling it more trouble than it was worth.