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Canadian businesses report minimal gains from Trudeau鈥檚 GST holiday

Small spike in sales noted, as well as struggles determining what products did and didn鈥檛 qualify
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Guy Bagley and Erin Salisbury are photographed at The Swag Sisters鈥 Toy Store in Toronto on Thursday, December 7, 2023. THE CANADIAN PRESS/Chris Young

About two months after the federal government temporarily knocked the GST off a holiday-centric array of goods, Dave Doyon says he considers the move 鈥渁 gift鈥 even though a hoped-for flurry of sales never fully materialized.

His Imaginaire toy stores saw a 15 per cent sales increase in January but it鈥檚 hard to parse out whether that was inspired by the tax break rather than marketing, shoppers鈥 whims or people looking for more indoor entertainment amid cold weather.

Even if Imaginaire鈥檚 sales lift did all come from the tax break that ends Saturday, Doyon has doubts about how much of a difference it made in the grand scheme of things. The point of the break, after all, was to save consumers money rather than convince them to spend more.

鈥淭he amount you save is for me a little bit too minimalist to have a real impact on your life or to have a real impact on your budget,鈥 Doyon said in an interview a few days before the relief was due to end.

鈥淲e all saved a couple of dollars here and there, but did you go to Florida this year because we had this five per cent off? I didn鈥檛, so for me, it鈥檚 too little to do a real impact on Canadian lives.鈥

The mixed feelings Doyon has about the tax break are mirrored across Canada鈥檚 retail and hospitality companies, with some saying the government incentive gave their business a little lift but others not noticing any impact.

Even those that got a boost say the snap decision to shave the tax from some toys, kids clothes, groceries and restaurant meals amounted to a lot of work for little gain.

The Swag Sisters鈥 Toy Store, for instance, didn鈥檛 see any meaningful surge it attributes to the GST break Prime Minister Justin Trudeau implemented to help Canadians deal with household costs and attempt to revive his plummeting popularity.

In fact, the relief period announced on Nov. 21 sent the Toronto retailer scrambling during the industry鈥檚 busiest season to be ready to offer the cut when it was set to kick in less than a month later.

鈥淚t was a lot of work for us to implement because even though we are a toy store, only 65 per cent of our products qualified,鈥 shopkeeper Erin Salisbury said in an email.

As she and other retailers quickly discovered, the government鈥檚 list of products qualifying for GST relief was riddled with nuances.

The tax was waived for items like printed books but not colouring, sticker, coin or stamp books.

Shoppers also got relief on jigsaw puzzles, board and card games 鈥 but not if they were geared toward kids over 14 or adults 鈥 and on toys, but only if they imitated other items like trucks, cars and dolls or were considered construction playthings like Lego, Plasticine or building blocks.

Once businesses figured out what was included, their work wasn鈥檛 over.

鈥淲e had to go line by line through 4,000 items to make the changes,鈥 said Salisbury, who will have to reverse all the tweaks this weekend.

The lacklustre experience her shop had with the tax break was much the same at Metro Inc., where CEO Eric La Fl猫che has said there was no bump in the volume of product sold at his grocery stores.

Canadians also seemed to make fewer shopping trips. Payments processor Moneris found the number of transactions across all stores in the country between Dec. 14 and Jan. 15 fell one per cent when compared with the same period the year before. The total spend fell four per cent.

Even provinces and territories that dropped their sales tax to match the federal government鈥檚 break experienced a slide. Ontario transactions dropped by three per cent and the numbers in Atlantic Canada were unchanged, the data showed.

Businesses expecting to be among the biggest beneficiaries of the GST pause struggled, too. Hobby, toy and game stores saw a five per cent drop in transaction sizes, Moneris said.

鈥淭he tax break鈥檚 modest savings didn鈥檛 seem to appeal to consumers,鈥 Moneris鈥檚 director of business development Sean McCormick concluded. 鈥淚ts short, two-month window likely further curbed the opportunity for consumers to plan and make meaningful purchases.鈥

Yet there were a few bright spots.

Moneris found kids鈥 clothing stores saw transactions rise eight per cent, though the amount spent at the retailers was unchanged.

Reservations platform OpenTable also saw the number of online bookings for seated dinners at Canadian restaurants between Dec. 14 and Feb. 11 increase 22 per cent from a year earlier.

Survey data from Restaurants Canada similarly showed there was a modest increase in how often Canadians dined out at restaurants in December compared with December 2023.

The gain persisted for the remainder of the GST period and was enough for the industry group to start calling for the relief to be extended or made permanent.

Doyon suspects many other industries don鈥檛 feel as strongly as Restaurants Canada because the incentive only amounted to a few dollars in savings on many purchases.

鈥淚 don鈥檛 know anyone that went to buy a board game because it was five per cent off,鈥 he said.

鈥淚 would say that, for me, the GST break didn鈥檛 create any sales, but it may have created a little incentive to (buy something) that month instead of waiting.鈥

Yet businesses say that behaviour has been fleeting as the country reached the dying days of the GST relief.

Not only are customers contending with the loonie recently tumbling to its lowest point in years but they鈥檙e also bracing for their bank accounts to take a hit as the U.S. amps up its threats to place tariffs on Canadian goods.

鈥淲e have seen a decline in sales over the last two weeks,鈥 Salisbury said.

鈥淲e assume people are concerned about the economic uncertainty.鈥





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