Small businesses oppose the Liberals’ two-month GST/HST tax break, citing unaffordable administrative costs and poor timing.
According to the Canadian Federation of Independent Businesses, three-quarters of businesses say implementing the holiday will be costly and complicated because they have to reprogram their point-of-sale systems to implement the tax.
The non-profit business advocacy group surveyed 3,591 small businesses between Nov. 26 and 27.
“A majority of small firms oppose the planned GST/HST holiday – and this rises to 62% among those required to implement it,” said Dan Kelly, CFIB president. “Only 4% of small business owners believe they will have stronger sales as a result, with 66% of respondents suggesting it will simply shift sales into the tax holiday period.”
The Conservatives voted against the Liberal-NDP coalition’s two-month HST/GST tax break, which also plans to hand out $250 cheques to approximately 18.7 million Canadians. Combining the GST tax cut and cheques, the plan will cost more than $6.2 billion, not including the HST cut.
“This isn’t a tax cut. This is an inflationary, two-month temporary tax trick that will drive up the cost of living,” said Conservative Leader Pierre Poilievre.
Canada’s debt officially doubled on Aug. 30, reaching $1.232 trillion — a result of Prime Minister Justin Trudeau spending more during his tenure than every other prime minister before him combined.
Over seven in ten small businesses said that larger companies and online giants will benefit from the holiday, instead of themselves.
Kelly revealed that small business owners will have to sort through the 3,500 items in their store and make “educated guesses” on which ones will be tax-free and which won’t. The owner will then have to reprogram their machine, educate their staff, explain to customers, and hope not to make errors that could result in fines from the CRA.
“And he has to have all of this implemented 2 weeks before Christmas — which can make or break his year,” said Kelly.
He said small firms face costs as high as $2,000 per business to reprogram point-of-sale systems.
“We will no doubt have increased accounting costs as these ludicrous measures are for a finite period. We will also no doubt have livid customers as there will be a time of struggle between getting this implemented seamlessly,” one business owner told Kelly.
Another told Kelly this was already affecting their business negatively.
“I own a small children’s toy store, and as of Monday, I already noticed an immediate drop in sales because of the GST announcement. A lot of people are now waiting until Dec. 14th to make their purchases. This is having a large negative impact on my business,” said the business owner.
Over two-thirds, 68%, of business owners said that finding out which items are temporarily tax-exempt is a difficult task.
X commentator Martyupnorth showcased a picture in a post to X, highlighting the concern.
“One of these toys will be exempt from the GST after Dec. 14; the other is not,” he said after posting a picture of a Lego tower and a Lego Titanic. “This is going to be an administrative nightmare for stores and online businesses.”
This is because toys that imitate another item, whether real or imaginary or involve building, creating or assembling structures, objects or models using pieces, parts, materials, or modelling compounds are tax-exempt. Toys and model sets marketed primarily for adults, such as adult Lego or train sets, remain taxable
Two-thirds of small businesses said that the tax holiday will delay purchases. Over half, 54%, believe consumers will return products to repurchase them during the holiday period.
“This legislation was introduced just yesterday – right in the middle of the busiest retail week of the year with Black Friday, Small Business Saturday and Cyber Monday,” Kelly said. “Small firms – particularly those in retail – do not have the time or resources to effectively make the changes to accommodate this temporary change, and very few believe there will be any net benefit.”
“Instead of a complicated, temporary tax holiday, small businesses would far rather government focus on permanent tax changes, such as cancelling the 19% increase in the carbon tax planned for April 1,” Kelly added. “But if government proceeds with this plan, CFIB is calling on the Department of Finance to give affected small firms a credit of a minimum of $1000 in their GST/HST accounts to cover the administrative and programming costs.”
A previous survey highlighted that 85% of small businesses oppose the federal carbon tax.
“Further, CFIB is calling on the government to order the Canada Revenue Agency to forgive the taxes owed, penalties and interests for any good faith errors made by small firms rushing to implement this change,” reads the release.
