Vancouver resident Tara Garofano says she made a dinner reservation on Valentine’s Day — not for romance, but to take advantage of the final hours of the federal government’s temporary Goods and Services Tax (GST) holiday.
“It was really nice to save an extra bit of money,” she told CBC News.
The two-month GST/Harmonized Sales Tax (HST) exemption, which began on Dec. 14, was promoted as a way to ease cost-of-living pressures by eliminating the tax on some essential goods and holiday items, including groceries, restaurant meals, books, games, children’s toys, and clothing.
“It would be nice if this is something they could permanently do, especially with everything going on with the States and tariffs,” Garofano added.
The federal government’s GST break kicks in on Saturday. While consumers are excited about the prospect, some B.C. business owners say it’s an administrative nightmare that will cost them money, as Michelle Gomez reports.
But with the exemption now over, reactions remain mixed. Some experts say it wasn’t worth the extra work it put on businesses, although some numbers suggest that spending increased slightly over the last few months.
Mixed reactions
Restaurants Canada had previously pushed for a permanent GST exemption on restaurant meals, arguing it would provide long-term relief for the struggling industry.
Mark von Schellwitz, the organization’s vice president for Western Canada, said the holiday gave some businesses a modest boost.
Data from OpenTable, a restaurant reservations platform, suggests dining out in B.C. increased by 12 per cent during a two-week period last December compared to the same time in 2023.
However, Vancouver resident Aaron O’Connor said the tax break had little impact on his spending.
“I think it just didn’t make much of a difference … because it’s only five per cent and only on certain products that people don’t really pay attention to,” he said.
Lindsay Meredith, professor emeritus at Simon Fraser University’s Beedie School of Business, called the tax holiday a political move rather than a sound economic strategy.
“It was a vote grabber,” he said. “Small businesses got a little boost … they didn’t have to pay some tax, so they could charge the same price, and suddenly they were doing a little better. But medium and large businesses, not so much.”
The federal government’s two-month break on the GST ends Saturday, and while a small percentage of restaurants and other businesses saw sales increase, most saw no overall change. There were also complaints about the work needed to implement the change.
Meredith also noted that the cost of implementing the tax break may have outweighed its benefits.
“[Businesses] had to rejig and retool their whole digital system and tax structure and cash registers…so when you subtract all those out-of-pocket costs, this wasn’t such a big rosy gift as it might have seemed at the outset.”
According to a recent poll by the Canadian Federation of Independent Business (CFIB), the average small business spent $1,000 reprogramming their point-of-sale systems to accommodate the tax break, with many owners confused over which items were exempt.
The federation also found that only five per cent of businesses in Canada reported an increase in sales during the tax holiday, with 15 per cent of restaurant owners seeing a spike. Most businesses reported no change overall, while some even cited declines in sales.
Despite the numbers, Carson Binda, the B.C. director for the Canadian Taxpayers Federation, urged consumers to take advantage of the tax break while they still could.
“Even though this temporary tax holiday was a political gimmick, folks should still stock up now to save on the GST,” Binda said in a statement Friday. “People should take advantage of the tax break before it goes back up.”
“Ottawa needs to do more than temporary sales tax holidays, which means politicians must find real savings so taxes can go down permanently.
With businesses reverting back to the original GST rate, the federation added that Ottawa needs to go beyond short-term tax holidays and implement lasting reductions.
