Breadcrumb Trail Links Personal Finance Taxes Kim Moody: Proposed GST/HST holiday and the Working Canadians Rebate will have no lasting benefits Published Nov 26, 2024 • Last updated 6 hours ago • 5 minute read
Prime Minister Justin Trudeau announced a temporary suspension of GST on select goods at Vince’s Market, a grocery store in Sharon, Ont. Photo by Chris Young/The Canadian Press files Reviews and recommendations are unbiased and products are independently selected. Postmedia may earn an affiliate commission from purchases made through links on this page.
Our tax system is riddled with legislation that seems to be driven by politics rather than practicality, like the federal government’s idea to temporarily scrap sales tax on certain items. Announced with flashy language as “More money in your pocket: a tax break for all Canadians,” the proposal suggests cutting GST/HST to zero on a long list of goods from Dec. 14, 2024, to Feb. 15, 2025.
How they decided which items would be affected is anybody’s guess, but I picture a bunch of out-of-touch politicians, staffers, and bureaucrats thrown together to figure it out. Those involved in making such decisions should at least have some real-world business experience to understand how these changes affect actual businesses.
Let’s talk logistics: Updating electronic point-of-sale systems to reflect a new tax regime is no small or quick task. While larger retailers might have a team to handle this, many others will need to hire costly consultants to make the changes and then switch everything back again in February. If retailers charge too much tax by mistake, will consumers get refunds? Will retailers face penalties for overcharging? The draft legislation hasn’t been released yet, so these questions remain unanswered.
On top of this, they’ve also introduced the “Working Canadians Rebate.” In essence, if you worked in 2023 and made under $150,000, expect a $250 cheque come spring. But is this rebate going to be taxable? What happens if someone has investment income but no employment earnings? Will they still qualify? And what about stay-at-home parents with no income—are they left out?
The current information suggests that if you reported Canada Pension Plan or Employment Insurance on your tax return or reported EI income, you’re in. This criterion likely excludes a lot of people. To qualify, you also need to be living in Canada on March 31, 2025, and not deceased by April 1, 2025—how the Canada Revenue Agency will confirm that before cutting the checks is yet another question.
Such political plays are unfortunately not a first. We saw similar tactics during the COVID-19 period with numerous federal cash giveaways. The recent 2023 Grocery Rebate and Ontario’s plan to dole out $200 to citizens are the latest examples. Even past provincial actions like Alberta’s “Ralph bucks” or British Columbia’s climate action dividends from 2008 reflect the same short-term thinking.
While these moves might seem generous, they’re essentially ways to win votes, not effective use of public money. The current federal approach is set to cost at least $6.3 billion—money that will need borrowing and incur interest, a burden passed to future generations.
Rather than turning the tax system into a political tool, we’d do better by focusing on measures that enhance long-term productivity and prosperity. Just like planting an acorn, which grows into a mighty oak providing shade and resources over centuries, our tax policy should aim for lasting growth.
The proposed GST/HST holiday and the Working Canadians Rebate, on the other hand, are like a sugar rush—quickly spent with no enduring advantages.
My son recently shared an ancient Greek proverb with me: “A society grows great when old men plant trees whose shade they know they shall never sit in.” Approaching our tax policy with such foresight would serve Canada far better than short-term stunts.
Kim Moody, FCPA, FCA, TEP, is the founder of Moodys Tax/Moodys Private Client, former chair of the Canadian Tax Foundation, and has held various leadership positions in the Canadian tax community. Reach him at [email protected] and connect on LinkedIn.
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