Paul MacKay, manager of King’s Co-op Bookstore in Halifax, says his business didn’t see an increase in sales from the tax break, but it did bring additional hours of work, lost revenue and logistical headaches.Ingrid Bulmer/The Globe and Mail
Katie Mackinnon remembers when Chrystia Freeland popped by the toy store she co-owns in Toronto early this winter. It was around the start of Canada’s GST/HST holiday, which gave consumers a tax break on a range of goods and services such as books, beer, children’s toys and restaurant meals.
In a moment captured on video, the then-finance minister nodded as Ms. Mackinnon and her business partner spoke of the benefits they hoped the tax break would bring for business and customers.
Two months later, with the GST holiday about to end on Feb. 15, Ms. Mackinnon said the promised benefits haven’t materialized.
“Over all, I don’t think it did a lot for sales,” she said. “If you know, you weigh in all the work we had to do prior, to change over our system, the tax overrides et cetera, that was a lot of work, and then we have to change it all back. … I don’t think we saw a huge difference.”
She is not the only one feeling disappointed. Initial data suggest consumers did not come out to spend in droves and, at least for businesses, there’s little evidence that the holiday put more money in people’s pockets.
According to digital commerce provider Moneris, overall transactions between December, 2024, and January, 2025, declined compared with the same period a year ago.
While transaction count fell 1 per cent, which suggests Canadians weren’t shopping more often, transaction size also dipped 3 per cent.
Moneris’ data also showed that spending across Canada was down 4 per cent year-over-year during the first month of the GST holiday. (In an e-mail, Moneris’s spokesperson David Litwin said the company is updating its data for the end of the GST holiday to provide a full picture.)
For hobby, toy and game stores, like Ms. Mackinnon’s, Moneris saw a 5-per-cent decline in transaction size, while transaction count stayed the same.
Ms. Mackinnon recently discovered that the headaches are far from over. For some of the company’s vendors, the invoices had no GST. “If it’s not paid for before the 15th then the vendors will charge a separate invoice for the GST or reinvoice us.”
Ryan Mallough, vice-president of legislative affairs at the Canadian Federation of Independent Business, which surveyed members about the GST holiday in January, said that government officials hadn’t thought through the logistical hurdles, including how to define items such children’s toys.
“It was a lot more work than I think government understood to change point of sale machines, to go line by line, figuring out what the tax applies to, what it now doesn’t apply to,” he said. “We had business owners … asking which Lego set does this apply to? What qualifies as adult, what qualifies as for a kid?”
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Paul MacKay, manager of King’s Co-op Bookstore in Halifax, said sales at his bookstore epitomized some of the confusion.
“You could buy a puzzle and save the tax but if you bought a mat to do the puzzle on that wouldn’t count because it’s not officially a puzzle,” he said.
While his business didn’t see an increase in sales from the tax break, it did bring additional hours of work, lost revenue and logistical headaches.
“The [GST] program stipulates that items must be purchased and delivered during the tax break to qualify, but if a customer preordered a book during the tax break, they were charged a no-tax price – when the book arrives … we’re supposed to charge them tax,” he said. “I’m not going to chase down every sale like that and tell customers they now owe me more money, so I’ll be reducing the original cost.”
The survey of CFIB members found that only 5 per cent reported stronger sales during the GST holiday compared with the same period last year. Among those, 15 per cent of businesses in hospitality and 4 per cent of businesses in retail saw a bump.
But for some bar and restaurant owners, the tax break’s benefits hit only at the start.
Adin Wener, co-owner of Henderson Brewing, a bottle shop and bar in Toronto that also sells beers to restaurants, said the immediate bump did not offset the time, money and effort involved in reprogramming business tech and meddling with cash flow.
“The first day, people were like, where’s my free beer? I want my ‘free’ beer! And then we really didn’t notice it after that,” said Mr. Wener, referring to the steep discount customers initially expected.
“A pint of beer is $8 so, you know, 13 per cent is only, what? Like 99 cents,” he said. The price dip wasn’t much for customers. But for business owners, that same 13 per cent affected cash flow because they hold the money first and pay the tax later.
“You do live off that 13 per cent before you have to pay it,” he said. “For $1,000 in sales, that’s an extra $130 in my bank at the end of the night.”
Not all the indicators point to a bleak GST holiday.
Moneris data suggest the tax break did create growth in some categories, such as children’s apparel, where the number of transactions spiked 8 per cent.
Online restaurant-booking service OpenTable, which looked at diners in Canada from Dec. 14, 2024 to Feb. 11, also saw a 22-per-cent increase in seated diners compared with the same period a year earlier. In a statement, OpenTable Canada country director Matt Davis said that “while a number of factors could be at play,” the tax holiday may have played a role in “driving Canadians’ enthusiasm for dining out.”
For Mr. Mallough, the big worry is that consumers will notice when the costs increase after Feb. 15, and take out their frustration on businesses.
“It’s that old adage, right? When something gets lowered by a small amount … you don’t necessarily feel it,” he said. “However, when it goes up – people are much more sensitive to increases.”
