Who buys Christmas trees after Dec. 14? And other concerns about Trudeau’s sales-tax break

OTTAWA — The Trudeau government took provinces, businesses and other Canadians by surprise Thursday by announcing a two-month GST/HST holiday to start before Christmas, to be followed by a $250 cheque to qualified Canadians next spring. The estimated cost: $6.28 billion.

If it’s passed by Parliament in time (more on that later), the sales-tax holiday is supposed to last from Dec. 14 to Feb. 15 and will apply to Christmas trees, alcohol, prepared food, children’s clothing, diapers, toys, books, snacks and sweets. But the plan has retailers asking a lot of questions as they’re already well into the holiday season. So are provinces, who find themselves on different sides of the sales-tax break.

Here are some of the biggest issues:

Unintended consequences for retailers

Dan Kelly, President and CEO of the Canadian Federation of Independent Business (CFIB), outlined on X many of the challenges posed by the upcoming tax break for many retailers.

Kelly heard from many of them that the announcement did not give them enough advance notice to change their point-of-sale systems (aka cash registers) at the busiest time of the year and that the list of tax-exempt goods is too broad, leaving thousands of products in a grey area, bringing a risk of government tax penalties for getting it wrong.

He also heard that the tax break is arriving very late in the Christmas shopping season and that customers will be tempted to return large purchases they’ve already got with the intention of buying them again after Dec. 14, tax-free.

“This will make it even tighter to make sales and serve customers,” he wrote on X.

Industry association Restaurants Canada, on the other hand, says it’s members are rejoicing at the idea of offering a tax break to customers on prepared food after being hit hard by the pandemic and the inflation crisis.

“More Canadians will be able to celebrate with loved ones at a restaurant, have lunch with colleagues or treat themselves to a morning pastry on their way to work. We also appreciate that the relief will be extended over January, which is typically the lowest time of the year for our industry, and right through to Valentine’s Day,” read a statement from the association on Thursday.

Sylvain Charlebois, a professor specializing in food distribution and security at Dalhousie University estimated on Friday that the average Canadian would save $4.51 in grocery taxes and $19.51 in restaurant taxes over the two-month period.

Sorry retirees and homemakers, no cheque for you

The $250 cheque the Liberals are promising some time “early next spring” will be for the 18.7 million Canadians who worked in 2023 and earned up to $150,000 individual net income.

That means people who didn’t have paid employment last year, including retirees and homemakers, won’t be getting anything. Prime Minister Justin Trudeau said Thursday his government had already provided targeted help to families and more vulnerable Canadians, but he said too many people who are struggling didn’t qualify for those programs.

“As I travel across the country, I do regularly hear from working Canadians who are having trouble making ends meet, but saying, ‘Look, I don’t have kids. I’m not a senior yet, and I’m facing challenges,’” he said.

Trudeau mentioned his government’s decision to increase Old Age Security for older seniors and the Canada Child Benefit for young families, but also investments in a national daycare program. The Liberals have also increased disability benefits in their last budget, even though many advocates have criticized the measure as being insufficient.

The good news for people not struggling? Everyone gets the sales-tax break, even rich people.

Your provincial mileage will vary

The sales-tax break will apply to all provincial and federal sales tax in the five provinces that have a harmonized tax: namely Ontario, Newfoundland, Nova Scotia, New Brunswick and Prince Edward Island. But it will only apply to the GST — and not the separate provincial sales tax — in B.C, Saskatchewan, Manitoba and Quebec (Alberta has no provincial sales tax). So depending on where you live, you’ll get anywhere from a five- to 15-per-cent savings on qualifying goods.

Some of the HST provinces were not thrilled to discover they’re being roped in to the Liberals’ tax break.

New Brunswick Premier Susan Holt said the measure will cost her province $62 million in lost revenue and said she expects to be compensated by the federal government. It is unclear at the moment if she will be.

P.E.I. Premier Dennis King said the measure would cost his province $14 million.

“There is no agreement that the federal government would come in and give us that money or make us whole in any way,” King said in the provincial legislature Friday. “We’ll continue working with them and see what we can do, because it would drive a bit of a hole in our budget.”

But Ontario Premier Doug Ford said his government had already eliminated the provincial portion of the HST for some of the items mentioned in the federal government’s list, including children’s essentials and books.

“I gotta give them kudos,” Ford said. “Any government — I don’t care what political stripe — wants to put more money back in the people’s pockets? Good for them.”

Newfoundland and Labrador announced it would “match” the federal tax break and framed it as an affordability measure meant to provide an extra $48 million in relief.

Economist Trevor Tombe, at the University of Calgary, estimated Friday that it would cost the Liberal government about $1.4 billion to reimburse the HST provinces for lost provincial tax revenue, on top of the $1.6 billion lost in federal GST revenues.

Parliament isn’t passing anything right now

If the Liberals hoped that they could end two months of gridlock in the House of Commons by dangling more than $6 billion worth of holiday cheer, they may have miscalculated.

The House has been paralyzed by a standoff over questions of privilege, as the government refuses to hand over documents related to the “green slush fund” scandal, and matters of privilege supersede all other House business.

NDP Leader Jagmeet Singh said his party would agree to “pause” the current privilege debate for one day at a time.

He said pausing the debate would leave enough time for MPs to adopt the temporary break on the GST/HST for two months before Dec. 14. But he agrees with the Conservatives that the government should provide the unredacted documents to the House.

Trudeau said it “boggles the mind that the NDP is crossing its arms” and refusing to adopt the long list of legislation that has been on the back burner for weeks now. The government is also running out of time to review and pass the supplementary estimates before Dec. 10 to ensure that government spending can flow to fund critical programs.

“I’m really calling on the opposition parties to not let Conservatives continue to prove Parliament is broken and instead get busy delivering concretely for Canadians,” he said.

Freeland’s deputy director of communications, Katherine Cuplinskas, said it would be a “shame” if opposition parties “put partisan politics ahead of giving Canadians real relief.”

That means that the next three weeks will be crucial in finding a path forward to pass not only the tax breaks but approve billions more in spending. The Speaker of the House of Commons, Greg Fergus, has already urged MPs to end the standoff to make sure Parliament fulfills its duties and it is unclear whether the situation could force him to intervene.

Who the heck buys a Christmas tree after December 14?

According to a quick survey done in the National Post parliamentary bureau, no one.

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