The GST holiday ends on Saturday. Did it make a difference for shoppers and businesses?
Many Canadians say they didn't notice a big difference in savings or spending habits
With the two-month GST holiday wrapping on Saturday, shoppers and small businesses across Canada are weighing whether the tax break made a meaningful difference — and the verdicts are mixed.
The federal government imposed the temporary tax break on Dec. 14, 2024, applying it to restaurant meals, some alcohol, children's toys and clothing, magazines, newspapers and other goods. Government officials said it was a way to offset some of the costs of the holiday season.
At the time, some Canadians said they would welcome a tax break that would put a bit of money back in their pockets. Others were skeptical of how much of a difference it would make. Two months later, those attitudes have prevailed.
Toronto resident Renee Jagdeo said she was more encouraged to eat at restaurants during the grace period — and noted that "it would be cool" if some restaurants made the break permanent — but said it didn't otherwise change her spending habits.
"It's been impactful, it's been not impactful. I can't really say my budget has changed for anything," said Jagdeo, though she's considering stocking up on wine before the tax break ends.
Andrew Macrae, also a Toronto resident, said it didn't change much. "I guess if I add up the numbers it would show up, but in terms of behaviour or buying, it had no bearing. I buy what I need to buy. No more, no less."
Willis Storey, who was dining at a restaurant in Fredericton, said the tax break provided much-needed relief at a time when all food prices are high: "It's expensive eating out and it's expensive buying groceries these days. I went and looked at a little steak there the other day … $20. It's crazy."
Shoppers in Vancouver had mixed reviews about the tax break and its impact. Some said it meant extra money to spend on takeout or dinner with friends, with one person noting "It would be great if that's something they can permanently do." For others, it didn't make a difference to their bottom line, they told CBC News.
Rob Gillezeau, an assistant professor of economic analysis and policy at the University of Toronto, called the tax break a "nightmare" when it was first announced. Two months later, he doesn't believe it made a meaningful difference for Canadians.
"People are looking for a permanent, material shift in affordability in their lives," said Gillezeau. "A little tax holiday that causes them to move their diaper purchases up — that's not making life more affordable. That's a tax policy gimmick."
What about small business owners?
Back in December, some small businesses told CBC News that they hoped the GST holiday would boost foot traffic. Others were critical, saying the compliance costs and administrative burden associated with the tax break would outweigh any sales bump from higher spending.
Jennifer Leblond, who owns the modern general store Steeling Home in Calgary, told CBC News in December that the government's gesture, though appreciated, was ill-timed and would be a lot of work to implement.
At her store, it meant figuring out which products were eligible and hiring a technician to make the changes in their point-of-sale system.
With the GST holiday now ending, Leblond says it didn't make a big difference to the bottom line.
"I think we would've preferred to have a little bit of advance notice. It sort of got sprung on us; for us, it took some work," she said.
She added that she would have preferred it had been imposed outside of the busy holiday season.
Restaurant owners seemed to welcome the tax break more than other retailers when it was announced. Most restaurant foods and alcohol were included in the break, so it required less work to accommodate it.
On Prince Edward Island, Pedro Hernandez, co-owner of the Azteca Mexican Restaurant in Charlottetown, said the tax break brought more customers into his establishment.
"We realized that more people [were] coming, new people [were] coming."
On the flip side, he also noticed that customers were tipping less than usual.
Erin Gamelin, owner-operator of Stout Irish Pub in Toronto, said that while the tax break didn't make a huge difference to her business in the short term, she's in favour of having it permanently removed. "The [GST] break had a small uptick for us," she said.
"Other restaurants definitely felt it a lot more."
What do the numbers tell us?
It's still too early to say definitively whether the short-term GST break made a difference. The Ministry of Finance told CBC News in an email on Thursday that Statistics Canada hasn't yet released retail data that would show if the tax holiday had an impact.
The GST break began mid-way through December. Inflation edged down that month to 1.8 per cent, and the cost of certain items, like restaurant meals and alcohol bought at stores, declined. That was expected given that GST/HST is built into the prices Statistics Canada uses to calculate inflation.
Other early analysis seems to show that the tax holiday had a negligible effect.
RBC's spending tracker, which uses purchasing data from the bank's cardholders, showed on Friday that spending on items targeted by the tax holiday dropped off in January (-0.3 per cent) after a solid holiday period in December (+1 per cent).
Meanwhile, Canadian payments provider Moneris said people made fewer purchases between Dec. 14, 2024, and Jan. 15, 2025, compared to the same period a year earlier. Purchases at restaurants went down, but more transactions were made at children's clothing stores, according to the company.
"We knew that this was going to be an expensive policy with the general idea that it would make people feel like life is more affordable. I think at a fundamental level that hasn't shifted," said Gillezeau, the economic policy expert.
"Part of the reason that this type of sales tax holiday is such a mess is that all it really does is it causes people to shift when they make purchases. That's not usually going to be a core objective of anyone."
ABOUT THE AUTHOR
With files from CBC News, Anis Heydari and James Dunne