Here's how the GST holiday will impact northern Ontario residents, businesses

Saturday marks the first day of the federal government's two-month GST/HST holiday.

The Trudeau government says it is giving Canadians a break on the cost of some essential goods. It will waive the federal goods and services tax (GST), with Ontario following suit by waiving the harmonized sales tax (HST). These taxes will not be charged at the time of purchase between Dec. 14, 2024, and Feb. 15, 2025.

The tax holiday will apply throughout the supply chain, so goods from a manufacturer, wholesaler or retailer will also not be taxed.

Will people make use of the tax break ?

Karl Skogstad, a professor in the economics department at Lakehead University, says it could lead people to worry more about the future.

"This is an economic idea called Ricardian Equivalence, the notion that households are sophisticated entities that can foresee that a tax break today means higher taxes tomorrow, so I better save now," Skogstad said, explaining that some people might not increase their spending because of the tax holiday.

"In terms of this program, my rough estimate is that the GST brings in about 15 to 17 per cent of federal income. If you give a break on that for two months, that could cost one to one and a half billion dollars in foregone income. That has to be made up somehow," the economics professor said.

He also pointed to elasticity, a way of quantifying how much demand for a good changes when its price changes. People will be unresponsive to price changes for necessities like medicine but more responsive to non-essentials, like eating at a restaurant.

Tom McAllister, a resident of Greater Sudbury, says he thinks the tax break is just another political move.

"It might be a bit of help for people at Christmas time, but in the end, it's not saving us money, and it's not giving us anything back that we're not going to pay for later. So what's the point? It doesn't benefit us in the long run. If anything, it'll cost us more than we ever get back," McAllister said.

How will it impact businesses in northern Ontario?

Julie Hayes, assistant manager at Bay Used Books in Sudbury, says the business is excited for the tax holiday, as it could encourage people to buy an extra book or two.

"We have a computerized point of sale system. We have one tax key that we use, and 99 per cent of the products we sell only have the GST on them," Hayes said.

"We've already practiced reprogramming. My manager will probably do it Friday night after close and it'll be ready to go Saturday morning."

On the other hand, some business owners find the new rules challenging.

"We have a computer where we manually enter everything. Our inventory isn't barcoded, so we manually enter everything into the computer and then into our cash register," said Beth Turcotte, owner of Vintage Games 'n Junque in Sault Ste. Marie.

"For us, it's just about knowing which items to apply the tax to and which ones not to. I also don't think they gave enough notice for people to prepare. I'm glad it's going to benefit people in general. I don't know if it will benefit us as a business."

Here's a list of items getting a tax break:

Food and groceries 

• Prepared foods such as sandwiches, salads, platters and pre-made meals.

• Snacks including chips, candy, baked goods, fruit-based snacks and granola bars.

• Energy bars, but only if they are considered to be food by Health Canada are not enhanced by protein, caffeine, vitamins and/or minerals and meets other qualifications.

• Gift baskets, as long as at least 90 per cent of the contents are qualifying food or beverage items.

• Prepared meals and beverages, including delivery, but only when the food establishment delivers the meal.

• Prepared meals delivered by a third party (the delivery cost is not tax-exempt).

Beverages 

• All non-alcoholic drinks, such as coffee, tea, carbonated drinks, juices and smoothies, provided they aren't sold through a vending machine. 

• Alcoholic beverages such as beer, wine, cider and sake, so long as the alcohol volume is 22.9 per cent or less.

• Spirit mixed coolers and premixed alcoholic beverages with an alcohol volume of seven per cent or less. 

• Energy and protein shakes, provided they aren't enhanced with protein, caffeine, vitamins and/or minerals, and provided Health Canada considers them to be a food or beverage.

Restaurant meals and drinks

• Meals purchased at pubs, bars, food trucks or other places serving food and beverages.

• Mixed drinks served in restaurants and bars if they are qualifying beverages — sparkling wine and orange juice qualify, but a vodka and soda does not.

• Tips paid on meals and drinks, but only if they are included in the bill.

• Catering services that provide qualifying food and beverages.

Children's clothing and accessories

• Infant and children's clothes, including accessories such as bibs, blankets, hats, belts, suspenders, gloves and mittens.

• Footwear with an insole length of 24.25 cm or less.

• Some sports clothing, such as jerseys, ski jackets, leotards, unitards and bodysuits that can be worn outside of sports or dance activities.

• Diapers, both cloth and disposable, training pants or rubber pants designed to be used with diapers.

• Children's car seats, provided they meet Canadian safety standards and are not part of a stroller/carrier travel system.

Specialized items of clothing — including wetsuits, soccer cleats, bowling shoes, skates, ski boots and tap shoes — do not qualify.

Children's toys and video games

• Board games and card games, including playing cards and Pokémon cards.

• Toys that involve building, creating or assembling structures.

• Dolls, plush toys and soft toys and their accessories.

• Toys marketed for children below 14 years of age.

• Jigsaw puzzles for all ages.

• Video game consoles and video games for consoles qualify, but downloadable or online-only games do not.

Collectibles — including hockey cards, dolls or other toys marketed to adults — do not qualify.

Books, magazines and newspapers

• Most published books, including guide books and audio books. 

• Bound or unbound printed versions of scripture associated with any religion.

• Magazines and periodicals bought with a subscription which have no more than five per cent of their printed space devoted to advertising.

E-books and downloadable audio books do not qualify. Neither do books to write in, such as diaries, notebooks and agendas, and electronic and digital publications.