December 6th, 2024
A GST Tax Holiday will Help, but a Permanent Removal on Essentials Needed
Last week, the Prime Minister announced that he’d be seeking to introduce legislation in Parliament to provide a two-month break on the Goods and Services Tax (GST) and Harmonized Sales Tax (HST) for groceries, some essential items, and some gift items during the holiday season. He also announced that he would seek to provide $250 cheques to each working-aged Canadian who made less than $150,000 in 2023. This follows a New Democrat push to permanently remove the GST from many essential items and a call to the provinces to do the same with the PST. So what is included in the GST holiday, how does it differ from the NDP proposal, and what about the government’s proposed one-time $250 Canada Workers Benefit?
The Prime Minister’s announcement last week laid out that he will be seeking to remove the GST/HST off of many essential and, in some cases, non-essential items ahead of the holiday season, from December 14th, 2024 to February 15th, 2025. The goods noted in the deal include a variety of food items that were previously subject to taxation (including prepared foods like sandwiches and salads, restaurant meals, and bottled water), a number of items for children (including clothing items, diapers, footwear, and car seats), printed books and newspapers, Christmas trees, select children’s toys, and video games. While some of these items differ greatly from what was included in the NDP proposal, which included cell phones, internet and home heating bills, but did not include non-essential items like video games, it is good to see the government finally make some effort to reduce costs for struggling Canadians. And while we were willing to work with them to pass these measures that will give some financial relief to Canadians, they are only temporary solutions, compared to the NDP proposal that sought to eliminate the GST on essentials like home heating permanently.
The other part of the proposal, sending one-time $250 payments to Canadians making less than $150,000, was entirely new, seemingly modeled after a recent announcement Doug Ford made to send people in Ontario rebate cheques. While this part of their tax rebate holiday is in many ways welcome, it does ignore some of the most vulnerable people in the country, namely people with disabilities not able to work.
This is a serious omission. Seniors have also been excluded and because of this lack of foresight, New Democrats pushed the government back to the drawing board on the $250 payment, but worked to quickly pass the GST holiday legislation. What is curious, however, is that the Conservative caucus, including the official opposition leader, voted against it - even though they campaigned on a GST holiday as part of their 2021 election platform. We look forward to debating the one-time payment of $250, should the government table legislation that includes the most vulnerable.
This proposal, however, also ignores the other half of the ledger – how will the government afford the GST/HST tax holiday and the payment to working Canadians? They have not been forthcoming about this, and the two measures are estimated to cost the federal government $6.3 billion. New Democrats had previously proposed enacting an excess profits tax on those corporate entities who have made off like bandits during the inflationary crisis like massive grocery chains and oil companies, but it seems more likely that the government will simply try and eat the cost and add to the national debt.
Canadians have expected their government to tackle the affordability crisis long before now. They should be focused more specifically on essentials, because I think most people would agree that their phone bill is necessary, and a video game is not. They need to ensure that those measures also go to those most affected, including seniors, students and people with disabilities, because it’s otherwise a non-starter.