Questions arise about the federal tax holiday and $250 cheque

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OTTAWA — The Trudeau government took provinces, businesses and all Canadians by surprise by announcing a temporary GST/HST rebate in time for the holiday season and a $250 cheque to all working Canadians next spring — at the cost of $6.28 billion.

The changes — which have yet to be implemented by legislation — have sparked many questions amongst businesses who are getting ready for the busy holiday season but also Ontario and Atlantic provinces which do not have a separate provincial sales tax.

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Below are some of the recurring questions about these new measures.

Is the federal government excluding seniors from the $250 cheque?

The Working Canadians Rebate will offer a new $250 rebate to 18.7 million Canadians who worked in 2023 and earned up to $150,000 individual net income in early spring 2025.

That means people who have not worked last year, including retirees, will not be able to access those extra funds. Asked why that was the case, Prime Minister Justin Trudeau said his government had already provided targeted help to families and more vulnerable Canadians but many people who are struggling do not qualify for those benefits.

“As I travel across the country, I do regularly hear from working Canadians who are having trouble making ends meet, but saying, ‘Look, I don’t have kids. I’m not a senior yet, and I’m facing challenges,’” he recounted.

Trudeau mentioned his government’s decision to increase Old Age Security for older seniors and the Canada Child Benefit for young families, but also investments in a national daycare program. The Liberals have also increased disability benefits in their last budget, even though many advocates have criticized the measure as being underwhelming.

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Trudeau said helping working people will not impact those targeted measures.

“We’re not reducing any of the other programs we’re delivering to the most vulnerable but recognizing hard-working Canadians… with a ‘thank you’ and support for the things that they need to continue to do to keep our economy strong, to build a strong future.”

A spokesperson for Finance Minister Chrystia Freeland claimed that it is “wrong” to say that seniors would not be eligible for the cheques and that all Canadians who have worked in 2023 and meet the qualifying criteria would receive the help, regardless of their age.

What will happen in provinces that have the harmonized sales tax (HST)?

The news of a holiday tax break will have a bigger impact in the five provinces (Ontario, Newfoundland and Labrador, Nova Scotia, New Brunswick and Prince Edward Island) where the entire sales tax will be removed from qualifying goods for two months.

The HST is a combination of federal goods and services tax (GST) and the provincial sales tax (PST). It is collected by the Canada Revenue Agency (CRA) which would typically send the provincial portion of the sales tax back to the respective provinces.

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New Brunswick Premier Susan Holt has already said the measure will cost her province $62 million in lost revenue and said she expects to be compensated by the federal government. It is unclear at the moment if that will be the case.

Others rejoiced at the perspective of cutting more taxes. Ontario Premier Doug Ford said his government had already eliminated the provincial portion of the HST for some of the items mentioned in the federal government’s list such as children’s essentials and books.

“I gotta give them kudos,” he said. “Any government — I don’t care what political stripe — wants to put more money back in the people’s pockets? Good for them.”

Ford added he is in favour of the federal government giving $250 back to Canadians and said he is “glad they took our lead on that.” Ford intends to send $200 cheques to Ontarians in the mail next year even though he insists it is not tied to an early election.

“Folks, it’s not our money. The government has a sense of entitlement that it’s their money. No, it’s the people’s money. It’s the hard-working firefighters, the hard-working people in the factories, money. It’s not the government’s money.”

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Newfoundland and Labrador announced it would “match” the federal tax break and framed it as an affordability measure meant to provide an extra $48 million in relief.

Will this GST/HST break have unintended consequences for businesses?

Dan Kelly, President and CEO of the Canadian Federation of Independent Business (CFIB), outlined on X many of the challenges posed by the upcoming tax break for many retailers.

Kelly heard from many of them that the announcement did not have enough advance notice to change their point-of-sale systems at the busiest time of the year and that the list of tax-exempt goods is too broad, leaving thousands of products in a grey area.

He also heard that the tax break is arriving too late in the season and that customers may be tempted to return large purchases with the intention of buying them after Dec. 14.

“This will make it even tighter to make sales and serve customers,” he wrote on X.

Restaurants Canada, on the other hand, are rejoicing at the idea of offering a tax break to customers after being hit hard by the pandemic and the inflation crisis.

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“More Canadians will be able to celebrate with loved ones at a restaurant, have lunch with colleagues or treat themselves to a morning pastry on their way to work. We also appreciate that the relief will be extended over January, which is typically the lowest time of the year for our industry, and right through to Valentine’s Day,” read their statement.

How will the government pass these changes with a stalled Parliament?

If the Liberals hoped that they could end two months of gridlock in the House of Commons by dangling more than $6 billion worth of holiday cheer, they were wrong.

NDP Leader Jagmeet Singh said his party would agree to “pause” the current privilege debate in the House — which relates to unredacted documents about a now-defunct government agency known as the “green slush fund” — for one day at a time.

He said pausing the debate would leave enough time for MPs to adopt the temporary break on the GST/HST for two months before Dec. 14. But he agrees with the Conservatives that the government should provide the unredacted documents to the House.

Trudeau said it “boggles the mind that the NDP is crossing its arms” and refusing to adopt the long list of legislation that has been on the back burner for weeks now. The government is also running out of time to review and pass the supplementary estimates before Dec. 10 to ensure that government spending can flow to fund critical programs.

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“I’m really calling on the opposition parties to not let Conservatives continue to prove Parliament is broken and instead get busy delivering concretely for Canadians,” he said.

Freeland’s deputy director of communications, Katherine Cuplinskas, said it would be a “shame” if opposition parties “put partisan politics ahead of giving Canadians real relief.”

That means that the next three weeks will be crucial in finding a path forward to pass not only the tax breaks but approve billions more in spending. The Speaker of the House of Commons, Greg Fergus, has already urged MPs to end the standoff to make sure Parliament fulfills its duties and it is unclear whether the situation could force him to intervene.

Finally, who the heck buys a Christmas tree after December 14?

According to a quick survey done in the National Post parliamentary bureau, no one.

National Post
calevesque@postmedia.com

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