The Conservatives’ proposal for a one month “holiday” on paying GST in retail stores received a lukewarm response from a group representing small businesses Tuesday.
Conservative Leader Erin O’Toole’s platform proposal to implement a GST “holiday” for one month this December received mixed reviews Tuesday from a group representing small businesses.
The plan would temporarily suspend the 5 per cent GST collected by the federal government on sales made in retail stores. The Conservatives say this would save Canadians $1.5 billion and would be applied to their purchases at the point of sale.
“It’s time to give families a break and it’s time to help Canada’s small retailers get back on their feet,” O’Toole said Tuesday at a campaign event in Toronto.
The GST proposal was among a series of economy-focused ideas unveiled in the Conservatives’ platform Monday. The GST pledge fits into the party’s wider platform of government interventions to kick-start industries and improve affordability.
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“It’s getting harder to make ends meet in Canada. After all the suffering Canadians have experienced over the last 18 months, families are now being hit by higher prices. It’s getting harder and harder to afford the basics,” O’Toole said Tuesday.
The GST, implemented in 1991 under then prime minister Brian Mulroney, has long been a controversial tax. The Chrétien government promised to repeal or replace the tax but eventually adapted it into what became the HST. The GST was reduced by two percentage points over the course of Stephen Harper’s time as prime minister.
The tax brought in roughly $3 billion per month for the government in 2019, but emergency programs and reductions in consumer spending reduced that return in 2020.
GST proposal ‘gimmicky’: CFIB head
The Canadian Federation of Independent Business, an association that represents and advocates for many small and medium sized businesses in Canada, greeted the proposal with a mixed reaction.
“While any tax cut is welcome, I can’t help but feeling that a one-month GST holiday is a bit gimmicky,” CFIB president and CEO Dan Kelly said in a statement to CBC News.
Kelly questioned how easy it would be to temporarily suspend collection of the GST and whether it would apply only to traditional retail stores or to other purchases as well, like restaurant meals or cars. He said he worries that it would simply shift consumer demand from one month to another without boosting it overall.
“The Tories have made many strong small business platform promises, such as significantly expanded [Canadian Emergency Business Account] loans, but the GST holiday is not one of them,” Kelly said.
The Retail Council of Canada took a more reserved approach, saying it was waiting to see all the platforms before commenting on specific proposals.
It also said the retail sector needs long-term commitments from government to help businesses recover from the pandemic and increase consumer spending.
“So short-term things like the GST [holiday], those sorts of measures would be welcome and they could certainly hope to boost things during the critical fall and Christmas period, but long-term measures are what we’re looking for,” a Retail Council spokesperson told CBC News.
Voters respond
The proposal did get a warmer reception from at least one voter on the streets of Toronto. Jennifer Bosy told CBC News her husband owns a rug store and said that a tax holiday would be a “great idea for the businesses to help bring people in” — and might even sway her vote.
Rick Green was more skeptical: “I think it’s an election trick, a hollow promise.”
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One local businessperson said the proposal seems like an obvious one and it should have been in place early in the pandemic.
“It’s about time,” said Berthie Toledano, adding it would help to convince consumers to come back to stores.
Requests to the Liberals, NDP and Bloc Québécois for comment on the proposal were not immediately returned.
Liberal Leader Justin Trudeau proposed extensions to some COVID-19 business supports on Monday, while NDP Leader Jagmeet Singh promised to prioritize Canadian businesses when it comes to Canada’s recovery effort.