One week in, Toronto businesses say GST holiday has been tricky

Tyler Cheese · CBC News

· Posted: Dec 22, 2024 4:00 AM EST | Last Updated: 6 hours ago

The federal government’s GST holiday has been in effect for a week and some Toronto businesses say it’s been a challenging transition. 

Christina Kotiadis, owner of retail store Lemon & Lavender in Bloor West Village, said a big issue has been confusion over which products fall under the tax break.

“I’ve talked to some other small businesses that carry similar products to me and sometimes we will have two completely different ideas of what we think,” she told CBC Toronto.

It’s caused her some anxiety about marking items incorrectly and some customers are also confused, Kotiadis said. 

The Canadian Federation of Independent Business (CFIB) reports that most small businesses did not support the tax holiday before it began. At the end of November, CFIB data indicated that only four per cent of small business owners believed they’d see stronger sales. The owners polled expressed concerns about the costs to reprogram their point-of-sale systems and the short amount of time to implement the change.

WATCH | How the GST/HST holiday works: 

This Saturday marks the beginning of the Liberal government’s two-month GST/HST holiday that it says will give Canadians a break on the cost of some essential goods. Yet some say the list of tax-free items is confusing for businesses and consumers.

CFIB President Dan Kelly said the break has been a mess for most small businesses. 

“God help the small business owner that may have 3,500 items and has to sort out each one by hand to figure out whether it applies or not,” he said. 

Integration easier in some sectors than others

Kelly said he feels a more measured approach, where the needs of each sector involved were considered, would have worked better. For example, he said he feels restaurants have it easier than retailers.

“Almost everything in a restaurant has gone from being taxable to not being taxable,” he said. “So at least for them, there isn’t the subjectivity of trying to figure out which products are under the scope of it.”

That’s been mostly the case for Dawn Chapman, owner of Lazy Daisy’s Cafe at the corner of Eastwood Road and Coxwell Avenue.

“My sense is that both in restaurant and retail, people might be spending a little bit more,” she told CBC Toronto.

Customers don’t always know about the tax break, but once they see the bill they’re often willing to treat themselves to something extra, Chapman said. 

She’s hopeful the GST holiday could become an annual tradition. 

“If it’s repeated again next year, people go, ‘Alright, GST holiday, let’s get spending.’ And the more and the longer this goes on, then people will become more confident to spend more,” Chapman said. 

She does, however, think there needs to be an easier way for businesses to implement these changes and clearer guidelines on which items are covered. 

Retailers like Megan Munro, owner of Caribou Gifts in the Junction, agree that implementing the changes was the most difficult part of the process. 

“It did take a really long time, like probably at least eight hours to update our whole catalogue,” she said. 

Overall, Munro said she feels the holiday was a bad idea and won’t benefit her business much. 

“We haven’t noticed that it’s driving anyone extra for those tax free deals,” she said. 

Too soon to see the benefits for businesses 

Munroe said she also questions what will happen when the busyness of the holidays dies down. As a gift shop owner, she said she doesn’t feel the tax break will drive customers to her store in January and February. 

Kotiadis also isn’t sure how things will go into the new year. She said she feels it’s too soon to tell how much of her sales are being driven by the tax holiday.

“[Last weekend] we saw thousands of customers come through the door,” she said. “It’s impossible to know if those people came in because it’s Christmas or because you know it’s a great time to buy because it’s tax free.”

The GST tax holiday ends on Feb. 15, 2025.