Prime Minister Justin Trudeau announced Thursday a suite of new measures meant to alleviate some of the affordability pressures people have been experiencing in the post-COVID era — including a two-month GST holiday on some goods and services.
The Liberal government will also send $250 cheques to the 18.7 million people in Canada who worked in 2023 and earned $150,000 or less.
Those cheques, which the government is calling the “Working Canadians Rebate,” will arrive sometime in “early spring 2025,” Trudeau said.
The GST/HST holiday will start on Dec. 14 and run through Feb. 15, 2025.
People will be able to buy the following goods GST-free:
- Prepared foods, including vegetable trays, pre-made meals and salads, and sandwiches.
- Restaurant meals, whether dine-in, takeout or delivery.
- Snacks, including chips, candy and granola bars.
- Beer, wine, cider and pre-mixed alcoholic beverages below 7 per cent alcohol by volume (ABV).
- Children’s clothing and footwear, car seats and diapers.
- Children’s toys, such as board games, dolls and video game consoles.
- Books, print newspapers and puzzles for all ages.
- Christmas trees.
With these exemptions, all food in Canada will be essentially tax-free.
“For two months, Canadians are going to get a real break on everything they do,” Trudeau said at a media event in Newmarket, Ont.
“Our government can’t set prices at the checkout but we can put more money in peoples’ pockets. That’s going to give people the relief they need. People are squeezed and we’re there to help.”
If a family spends $2,000 on the eligible goods in the two-month period, they can expect to save about $100, according to government figures.
In provinces with the HST — where the GST is harmonized with provincial sales tax — the savings will be larger, the government said.
Provinces with the HST include Ontario, Newfoundland and Labrador, Nova Scotia, New Brunswick and Prince Edward Island.
In Ontario, for example, the same $2,000 basket of eligible purchases will result in estimated savings of $260 over the two-month period, the government said.
These savings will come with a big price tag for the federal government.
The tax holiday will cost the federal treasury an estimated $1.6 billion in foregone revenue. The $250 cheques will cost about $4.68 billion, a Finance official told CBC News.
The two affordability measures come as the government grapples with persistent unpopularity in the polls and after two stinging defeats in recent byelections.
The CBC’s Poll Tracker suggests Trudeau’s Liberals are about 17 percentage points back from the first-place Conservatives. That gap has narrowed somewhat in recent weeks.
The renewed focus on the cost of living is designed to bolster the government’s support among people who have been feeling the pinch after prices on almost everything have increased in recent years due to inflation.
But there’s a risk this new stimulus could juice inflation, which has only recently come down to the Bank of Canada’s two per cent target.
Economists agree that unprecedented government stimulus around the world during the pandemic contributed, in part, to elevated inflation as consumers flush with cash chased scarce goods.
The Bank of Canada also has said that if Ottawa had pulled back on COVID-related stimulus earlier, inflation likely would not have been as bad as it has been.
Justin Trudeau’s Liberal government has announced a temporary GST pause on some goods, along with $250 rebate cheques for Canadians earning less than $150,000. The NDP backs the move, but some experts worry it could reignite inflation.
Trudeau claimed Thursday that these measures are “not going to stimulate inflation.”
Finance Minister Chrystia Freeland also downplayed inflation fears, saying the Bank of Canada’s aggressive rate hikes have tamed inflation and Canada is on a more solid footing now.
“We’ve done the hard work we needed to do to get inflation down,” Freeland said.
Asked about the fiscal implications of the multi-billion dollar injection, Trudeau said the government has the capacity to implement these measures “because Canada has one of the strongest balance sheets in the world.”
The federal debt has doubled over the last nine years to $1.4 trillion. The cost to service that debt is projected to be $54.1 billion in 2024-25.
When asked whether it’s appropriate to slash the GST on products that could be considered luxury goods, like pricey video game consoles, Trudeau said most of the government’s affordability measures to this point have been more targeted, like GST rebates for low-income people and an OAS boost for seniors. He argued it’s time to give to everyone some relief.
“It’s time for people to get a bit of a break,” Trudeau said.
Conservative Leader Pierre Poilievre said Trudeau’s tax measures are “a trick” because it’s only temporary relief before the government goes ahead with a permanent carbon tax hike in the spring.
He said that on Trudeau’s watch, housing costs have doubled, food bank use has skyrocketed and the federal carbon tax is making it more expensive for people to heat their homes. He raised the spectre of these latest measures fanning the inflationary flames.
“That’s the misery you get with massive socialist money-printing and what I’m proposing is a common sense alternative,” Poilievre said, while touting his plan to scrap the carbon tax and the GST on new home sales.
Conservative Leader Pierre Poilievre would not say whether his party will vote against Prime Minister Justin Trudeau’s proposed two-month GST break on some items for the holidays and plan to send $250 cheques to some Canadians in the spring.
“Nobody believes Justin Trudeau and Jagmeet Singh after they’ve impoverished our people and made life worse off.”
Poilievre would not say how Conservative MPs would vote on the proposal, adding he needs to see the details.
“I don’t vote for press releases and press conferences,” he said. “Let’s see what they put before us.”
NDP to support affordability measures
Speaking to reporters after Trudeau’s announcement, NDP Leader Jagmeet Singh said his party will support the affordability measures in Parliament.
“We want to see this bill passed as quickly as possible,” Singh said. “We know middle class families need a break. We’re not going to oppose getting people some help.”
Singh said the NDP will work with the Liberals to temporarily lift the logjam in Parliament to get the bill through in a single day before then allowing an ongoing filibuster to resume.
Parliament has been paralyzed for the last six sitting weeks by a standoff over documents related to a federal green technology program plagued by scandal.
Opposition MPs passed a motion demanding the government release all internal documents related to that scheme and hand them over to the police in an unredacted form. The Liberals have so far refused. Parliament has been deadlocked as a result.
Last week, the NDP promised to go even further to improve Canadians’ purchasing power if elected.
Singh said he would permanently eliminate the GST on essentials such as grocery store meals and snacks, internet and cell phone bills, diapers and children’s clothing, and home heating.
NDP Leader Jagmeet Singh says he has written to Canada’s premiers asking them to match his pledge to remove the GST from daily essentials by doing the same with their provincial sales taxes.
This measure would deprive the government of $5 billion in tax revenues each year, the NDP estimates, and would be offset by revenues from a proposed tax on excessive corporate profits.
The NDP will support the temporary measure proposed by the Liberals, even if it is deemed insufficient.
But Singh said the party “will campaign hard on permanently scrapping the GST on daily essentials and monthly bills, like we already promised.”
- Is Justin Trudeau’s tax break on groceries enough? How are you cutting food costs at home? That’s the first topic on Cross Country Checkup this Sunday. Leave your reply here and we may read it on the Nov. 24 show.