The federal government’s GST holiday over the festive season could go unnoticed by many shoppers, says a Vancouver Island University professor.
Joanna Hesketh, a media psychologist in the faculty of management at VIU, said awareness of the GST tax holiday is low — it hasn’t really cropped up in the media ecosystem of gift-item lists and curated product recommendations.
The two-month tax break does not have the socio-cultural pull of big spending periods such as Black Friday and Christmas, she said.
Hesketh said that unless people are paying close attention to the news, they may not even be aware of the tax break.
From Saturday until Feb. 15, the federal government is waiving the five per cent federal goods and services tax (GST) on a number of products, including children’s clothing, books, toys, restaurant meals, newspapers, food and some alcohol.
While the tax break could help a family that is living paycheque-to-paycheque save an extra $50 to $100, it’ll likely be on purchases they already need to make, Hesketh said. “They’re going to spend because they don’t really have a choice — they’re just getting by,” she said.
It remains to be seen whether businesses will promote the tax break as a way of saving money on their goods and services, she said.
“If you’re somebody who buys a print newspaper, you’re probably somebody who buys that anyway — I don’t know that the impact here is going to be on a specific product,” she said. “People who can afford to go to restaurants, they’re going anyway.”
Tracy Smith-Carrier, a professor of humanitarian studies at Royal Roads University and sa国际传媒 Research Chair in advancing UN Sustainable Development Goals, said permanent tax relief, rather than a tax holiday, would better help those in need.
“This two-month GST tax holiday is temporary. It’s small in value and it’s not focused on the people that need it most,” she said.
There’s no guarantee that any tax savings would be passed on to the consumer, as businesses can increase their prices or reduce their holiday discounts and pocket the difference, she said.
“We’re in a cost-of-living crisis. One of four Canadians are struggling to put food on the table,” Smith-Carrier said. “When our food banks are at crisis points and homelessness is on the rise, we need real measures.”
People in sa国际传媒 also benefit less than those living in provinces with harmonized sales tax, who could be saving up to 15 per cent, she said.
Smith-Carrier said there are better ways to tackle poverty than a tax break that the federal government estimates will cost it $1.6 billion, such as bolstering disability and child benefits, which are rapidly losing ground amid the rising cost of living.
“Using $1.6 billion on a tax benefit that really is going to only privilege people that actually have the money to spend on restaurants and fancy-food gift baskets … it’s not really going to help those really struggling to buy the basics.”
The parliamentary budget officer’s estimate of the cost of the tax break is $1.5 billion, but that could go up to $2.7 billion if provinces with a harmonized sales tax ask for compensation from lost revenue.
So far, the province of Ontario, which stands to lose the most HST revenue, has said it will not seek compensation from Ottawa.
Smith-Carrier said there are ways to make up for the tax loss, including raising the taxes on capital gains and corporations, and introducing windfall taxes on “ultra-rich” corporations.
Nine out of 10 Canadians want to see more taxes on the most wealthy, said Smith-Carrier, citing a statistic from Canadians for Tax Fairness, a progressive tax advocacy group.
“If [the Liberals] had wanted to do tax measures, there’s lots they can do there and that would actually reduce poverty and also address inequality,” Smith-Carrier said.
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