Members of Parliament are set to vote on a Liberal bill proposing a temporary “tax holiday” for Canadians that is expected to pass with the support from the New Democratic Party.
The legislation, which was tabled on Wednesday, calls for a two-month break on the goods and services tax or harmonized sales tax on dozens of items, including certain groceries, alcoholic beverages and children’s clothing.
The vote in the House of Commons is expected to take place later on Thursday.
“By removing the GST from groceries, essential items, and holiday staples, we’re helping you save a little extra money for the new year,” Deputy Prime Minister and Finance Minister Chrystia Freeland said on X, formerly known as Twitter, on Wednesday.
“Today, we introduced legislation to make this happen. All parties should come together to deliver this much-needed relief for Canadians.”
The bill does not include a $250 rebate plan that was originally proposed by the Liberals alongside the GST holiday last week.
The bill was tabled with the help of the NDP to temporarily stop debate on a Conservative filibuster.
The NDP only agreed to support the bill after Freeland separated the GST break from a promise to also send $250 to most working Canadians in the spring.
The NDP wants that benefit expanded to also go to non-working seniors and people with disabilities who don’t have a working income.
During a debate in the House of Commons Wednesday night, NDP Leader Jagmeet Singh said the bill should pass, even though Conservative Leader Pierre Poilievre “hates it.”
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“New Democrats won’t let him win the fight,” Singh said.
He added that the NDP wants the GST permanently off daily essentials and monthly internet, phone and home heating bills.
Conservative finance critic Jasraj Singh Hallan said that the tax break is “nothing but a cheap gimmick and something just to buy votes from Canadians.”
If passed, the tax break will also apply to restaurant meals, snacks, prepared foods, children’s toys, car seats, books, print newspapers, puzzles and Christmas trees.
It is set to remain in effect from Dec. 14 till Feb. 15.
According to the federal government, the proposed tax break will save taxpayers an estimated $1.6 billion over two months.
The government says someone spending $2,000 on such items over the two-month period will save between $100 and $260 depending on the province.
The difference is because the four Atlantic provinces and Ontario have a harmonized sales tax with Ottawa, which means the entirety of that – 15 per cent in the Atlantic and 13 per cent in Ontario – will be lifted.
Other provinces will only save the five per cent GST unless those governments choose to lift their provincial sales taxes as well.
Mixed response to ‘tax holiday’
The “tax holiday” has drawn a mixed response from businesses, economic experts and advocacy groups.
According to a survey released Thursday by the Canadian Federation of Independent Business (CFIB), only four per cent of small businesses expect to see stronger sales as a result of the temporary GST/HST holiday.
There are many concerns and questions about the timing, process and administrative costs associated with the tax break, showed the CFIB survey, that was conducted this week.
“A majority of small firms oppose the planned GST/HST holiday – and this rises to 62% among those required to implement it,” CFIB president Dan Kelly said in a statement.
CFIB is urging the federal government to give affected small businesses a credit of at least $1000 in their GST/HST accounts to cover the costs of implementing the tax break.
The last-minute change in the middle of the busy holiday shopping season will likely affect consumer habits, with shoppers delaying their purchase for items included in the tax break, according to Bruce Winder, a retail analyst in Ontario.
“One of the things I worry about is because sort of this last-minute change and the timing, you could see consumers wait for categories impacted like toys, video games, children’s clothing,” he told Global News in an interview this week.
“It all depends on what savings they’re going to get this week versus if they wait until the GST blackout area and weigh that,” Winder said.
“But theoretically, if there’s not a lot of savings, if it’s sort of an item that’s regularly priced, certainly they’re going to look at the category more seriously once the GST holiday comes into effect Dec. 14.”
Restaurants Canada has welcomed the tax holiday, calling it a “big win” for the industry, which is still recovering from pandemic losses.
In a statement on Nov. 21, Kelly Higginson, president and CEO of Restaurants Canada said the announcement “restores some much-needed hope to our industry and we are optimistic it will translate to increased spending at local restaurants across the country.”
— with files from Global News’ Craig Lord and The Canadian Press
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