The federal government’s GST/HST holiday, announced for December 14, 2024, to February 15, 2025, offers consumers temporary relief from Goods and Services Tax/Harmonized Sales Tax (GST/HST) on a range of items during the holiday season. While the initiative is welcome news for Canadians feeling the pinch of rising costs, it presents significant challenges for businesses, particularly retailers and restaurants, at one of the busiest times of the year.

What the tax relief covers:

• Prepared foods, including vegetable trays, pre-made salads, and sandwiches
• Restaurants, including dine-ins, takeout, or delivery
• Children’s clothing, footwear, car seats, and diapers
• Certain toys such as board games, dolls, and video-game consoles
• Print newspapers and books
• Christmas trees or similar decorative trees
• Snacks, including chips, candy, and granola bars
• Beer, wine, cider, and pre-mixed alcoholic beverages below 7 per cent ABV

The administrative burden for business:

For businesses, particularly in retail and food service, implementing this tax holiday will require significant effort, including:

• Reprogramming Point-of-Sale Systems: Businesses must adjust their systems to remove GST/HST from the qualifying items and then reverse these changes in February. For small businesses with limited technical resources, this task is time-consuming and costly.
• Determining Tax Status: Retailers must clarify whether provincial sales taxes still apply to the exempt items, adding complexity and potential confusion for staff and customers
• Timing Challenges: The tax holiday comes during the busiest period of the year, when retailers and restaurants are already under pressure to manage high customer volumes, seasonal inventory, and staff shortages.

Short term relief vs long term solutions:

The Canadian Chamber of Commerce welcomed the announcement but emphasized the need for broader economic strategies: “This relief on everyday purchases is an important first step. But the root causes of Canada’s affordability challenges cannot be fixed with half-measures or temporary relief. What’s still missing is a clear plan to revive our economy for all Canadians — one that empowers new businesses to launch, helps existing ones grow and create jobs, ensures major projects get built, and keeps supply chains running smoothly without constant disruptions and rising costs.” — Jessica Brandon-Jepp, Senior Director, Fiscal and Financial Services Policy, Canadian Chamber of Commerce

The Thunder Bay Chamber of Commerce shares these concerns. While the tax holiday may temporarily boost consumer spending, it underscores the need for permanent measures that simplify tax policy, reduce administrative burdens, and support long-term business growth.