Questions swirl around temporary tax cut, timing

There's mixed reaction among some small business owners and customers in Ottawa about how much or even whether the coming two-month federal sales tax break on certain products will benefit them.

On Thursday, Prime Minister Justin Trudeau announced a suite of measures to help ease affordability pressures, including pausing these taxes on prepared food, restaurant meals, certain alcoholic beverages, books, and children's toys and clothing from Dec. 14 to Feb. 15.

Not everyone is certain it will make a significant difference given the stresses of the past few years, including COVID-19 and the resulting inflation.

"This is not very kind to retailers," said Mika Weaver, who owns Singing Pebble Books on Main Street.

She said one-third of her annual business happens in November and December. While she appreciates her customers will be able to save, she wonders why there's a wait of more than three weeks.

"It's our busiest time of the year and so if there's been an announcement that's come down to say wait until [Dec. 14] to shop, what are we supposed to do until then? How do I pay my staff? How do I manage my stock levels?" she said.

She's decided to begin offering customers a discount this week to try to encourage them to continue shopping before the tax drop.

This will definitely help alleviate a little bit of that pressure on the prices.- Henry Assad, owner, Happy Goat Coffee Company

Weaver's not alone questioning the timing.

"Being a student and trying to afford everything like rent, utilities that I'm paying for myself, especially with student loans, it's a little rough, I'm not going to lie," said Alana Rous, a student at the University of Ottawa.

"But I feel like … the time period could be expanded."

Changes will cost government billions

If an Ontario family spends $2,000 on the eligible goods in the two-month period, the government says it will result in estimated savings of $260 over the two-month period.

In Quebec, where the GST is not harmonized with its provincial sales tax, the same $2,000 basket of eligible purchases would result in estimated savings of about $100.

The tax holiday will cost the federal treasury an estimated $1.6 billion in foregone revenue.

Sending $250 cheques to the approximately 18.7 million people who worked in 2023 and earned $150,000 or less will cost about $4.68 billion, a Finance official told CBC News.

Martin Contal, who CBC spoke with while he was sitting in an Elgin Street coffee shop, doesn't believe the tax break will alter how often he goes out to eat.

"I think it's going to be more a feeling that things are perhaps a bit less expensive," he said.

Happy Goat Coffee Company owner Henry Assad does feel the measure will benefit his business and customers.

"The coffee industry has been going through turbulent times and you know, prices of coffee are going up. This will definitely help alleviate a little bit of that pressure on the prices," he said. 

"I just hope that they will extend it."

Ottawa Morning8:27Small businesses weigh in on the sales tax freeze

Two months without the GST/HST sounds good to most, but what does it actually mean for the small businesses that have to implement it? We’re joined by the owner of Tag-Along-Toys and Farmer's Pick.