Prime Minister Justin Trudeau announced that with NDP support, his government will pause both GST and HST sales taxes for Canadians on select goods for two months, starting weeks before Christmas.
Taxpayer advocates and Conservatives say this measure doesn’t go far enough to restore affordability in Canada.
The feds, expecting NDP support on the bill, announced a stop to GST and HST taxes on groceries, alcohol, children’s essentials such as car seats and clothing, toys, board and video games, books, and more from Dec. 14, 2024, to Feb. 15, 2025.
According to a government news release, removing the GST on qualifying goods will provide an estimated $1.6 billion in federal tax relief, though the release didn’t specify its estimate for total taxpayer savings for the HST.
It said a family spending $2,000 on the qualifying goods would save an estimated $100 in those two months. In provinces where the HST applies, such as Ontario, Newfoundland, Nova Scotia, New Brunswick, and Prince Edward Island, that same $2,000 basket will provide an estimated $260 more in savings from the HST.
“Canadians have been through a lot. They work hard. We see that. We’ve been able to get through the past couple of years, but everyone had to tighten their belts a little bit,” Trudeau said in a press conference about the announcement. “We’re there to help with money that will help people buy the things they need and save up for the things they want.”
The Canadian Taxpayers Federation responded in a news release, saying taxpayers are grateful for the tax cut but that more could be done to help struggling Canadians.
“Prime Minister Justin Trudeau needs to make this relief permanent because if he re-imposes sales taxes on diapers and rotisserie chickens after the holidays, it will be unacceptable to taxpayers,” Franco Terrazzano, the federal director of the CTF, said in the statement.
He said the plan would temporarily relieve some of the tax burden on Canadians, saving Canadians money during the expensive holiday season. However, he blamed the government for causing the issue it purported to solve.
“Ottawa made life more unaffordable by hiking carbon taxes, payroll taxes, alcohol taxes and capital gains taxes, so the government needs to go beyond a temporary tax cut to undo the damage it has done,” he said. “After raising taxes on everything all the time, temporary relief won’t cut it.”
NDP Leader Jagmeet Singh took credit for the tax break on Wednesday and is also calling for the GST holiday to be permanent.
The Conservative Party of Canada echoed Terrazzano’s point, saying that the “NDP-Liberal coalition” government of “pyromaniacs” cannot be trusted to put out the “inflationary fire” it started.
“This will not come close to making up for the permanent quadrupling carbon tax on heat, housing, food, and fuel, all to save Justin’s job and Jagmeet’s pension,” the statement said. “In just a few months, Trudeau and the NDP plan to raise taxes on all the same items they claim they’re giving you a break on, directly through the carbon tax. They plan to hike liquor taxes in April while they claim to be taking them off for the next two months.”
Conservatives said the first thing the Liberals and NDP need to do to address the affordability crisis is to “axe the carbon tax,” a tax on carbon that the NDP and Singh voted for 24 times, including a carbon tax hike in the spring.
“Canadians deserve relief, not more fake announcements that will do nothing to make life more affordable,” the CPC said. “Nobody believes Justin Trudeau and Jagmeet Singh after they impoverished Canadians and made life worse off for everyone.”
In addition to the GST / HST tax break, Trudeau also promised a “Working Canadians Rebate” of $250 for working Canadians who earned up to $150,000 in net income. The rebate would come in April 2025. According to the government release, an estimated 18.7 million Canadians will be eligible.
If the Liberal estimate is accurate, the rebate will add $4.675 billion to the national debt, which the CTF estimates is over $1.24 trillion.
“Our government can’t set prices at checkout, but we can put more money in people’s pockets. (the rebate) is going to give people that relief they need,” Trudeau said. These are things that recognize that people are squeezed, and we’re there to help money that will help People buy the things they need and save up for the things they want.”
When asked how his government would pay for this, Finance Minister Chrystia Freeland and Trudeau said they could do this because the economy is recovering from the pandemic, and the inflation rate has slowed.
Conservatives pointed out that Trudeau’s plan departs from his statements in May when he said that sending money into the pockets of Canadians causes inflation to go up by “exactly that amount.”
