The GST/HST holiday tax break comes to an end at midnight on Feb. 15, meaning Ontarians will once again have to pay up to 13 per cent in taxes on many items.
The two-month tax break had mixed reviews from businesses as some found the roll out confusing and time consuming, while others said they did experience a slight boost in sales.
Now that the relief is ending, many retailers that adjusted their payment systems and inventory will have to make the switch back.
Retail Analyst Bruce Winder said for many, it was a lot of work for little gain.
“You know it didn’t really move the needle significantly,” said Winder.
Winder said looking back on the two-month tax holiday, he would give the federal incentive a passing grade, but just barely.
“I would give it a C minus or maybe a D. It sounded good on paper, but it was hard to execute and retailers didn’t have time to put it together. There was a lot of confusion and not a lot happened when it comes to a retail sales bump,” said Winder.
The Canadian Federation of Independent Business said only about five per cent of small businesses had stronger sales than the same period last year.
The sector that had the biggest benefit from the tax holiday was the restaurant industry, where transactions jumped 7.6 per cent as millions of Canadians dined out and took advantage of no tax.
“We are very pleased with the results as they are strong in all areas. Sales are up, average cheques are up, foot traffic is up, and we’ve got job growth,” said Kelly Higginson, President and CEO of Restaurants Canada.
Restaurants Canada told CTV News Toronto the tax initiative helped create 34,000 jobs and brought in an additional $1.5 billion in sales.
The group is calling for the federal government to extend the tax holiday to benefit Canadians and the restaurant industry.
“We are calling for the removal of GST on all food, prepared foods, and restaurant meals. At a time when there is an affordability crisis, there is no need to have the GST on food,” said Higginson.
What to know before the tax break ends
The tax break ends Sat. Feb. 15 at midnight. Until then, you can save the tax on restaurant meals, prepared foods, and some snacks, beer, wine and cider, children’s clothing, footwear, diapers and car seats, some toys, games and dolls.
The end of the federal tax holiday comes as Canadians deal with uncertain times ahead with the United States and concerns over looming tariffs. Winder expects consumers to be in a cautious mood.
“It’s just a really tough time for Canadians to get out there and spend a lot with the headwinds and the turbulence coming up [with the U.S.],” said Winder.
As for businesses, some are worried they may have made mistakes in implementing the tax break. The Canadian Federation of Independent Business is calling on the Canada Revenue Agency to be lenient with penalties since there was a huge rush to roll out the program.
