The federal government’s GST tax “holiday” has been in place for a month and businesses say they’ve seen mixed results when it comes to increases in sales.
The “holiday” was announced in late November and goes from Dec. 14 to Feb. 14, with items such as children’s toys, restaurant food, snacks and wine free from either the government sales tax (GST) or harmonized sales tax (HST), depending on the province.
Restaurants Canada said they’ve heard in surveys of members about a boost in sales ranging from seven to nine per cent, and an increase in reservations as well.
The organization represents nearly 100,000 foodservice businesses.
Kelly Higginson, president and CEO of Restaurants Canada, said the boost has been apparent both during the holidays and after.
“Not only are we seeing an increase, but we’re seeing it at a time of year that is really unpredictable and very challenging for our operators, again, and going into the January and February months that can be particularly tough as well,” she said.
Higginson noted despite the holiday season, the last two weeks of December can still pose challenges for restaurants’ bottom line given holiday closures, bad weather and other issues.
According to estimates by Restaurants Canada’s chief economist Chris Elliott, the tax change is expected to generate an added $1.5 billion in sales for the restaurant industry by the time it ends next month.
While there was initially some confusion over what goods would receive the tax exemption, such as Lego sets or clothing, restaurants saw tax exemptions on everything from prepared meals to most alcohol.
Higginson said the “clarity” changed behaviour and was seen “from a wide range and a large percentage of our membership.”
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“Last year around this time, and it continued into the spring and summer, we saw Canadians having to pull back on their restaurant spending because of the lack of discretionary spending in their pockets. I think what we’re seeing is this is something they really wanted to get back to being able to do and enjoy with their friends.”
Higginson added people have been changing from quick-service to full-service sit-down businesses. Others have upgraded their orders to something of a higher price, and some even have added bottles of wine that they might not have purchased when tax was attached.
The effects on small retailers beyond the restaurant sector are trickier to parse so far.
The Canadian Federation of Independent Business (CFIB), which represents more than 100,000 small and medium-sized businesses, told Global News on Monday that after one month, preliminary results of surveys of members show five per cent report a boost in sales attributed to the tax holiday.
“The vast majority of businesses felt that it was either the same or even a reduction in sales as a result of the tax holiday because of its temporary nature,” said Dan Kelly, CFIB president, adding the change was “hugely time-consuming for many businesses.”
Kelly said businesses had to spend on average about $1,000 to change their point-of-sale systems to reflect the changes.
“It seemed to fall like a lead balloon in terms of adding any new net sales to small and medium-sized companies across the company,” he said.
The Canadian Chamber of Commerce told Global News in an email that businesses were “scrambling” to implement the tax change, but are now raising concerns they face “uncertainty around demand peaks in February” when the tax break ends.
It says there’s also concern about having to revert the point-of-sale systems when it ends, and the “reconciliation” process, such as potential audits of their sales records and filings.
Both the CFIB and Restaurants Canada say changes should be made to remove or reduce the taxes on items as the temporary “holiday” may not have enough of an impact.
“We don’t need tax gimmicks, we need tax reductions and the government unfortunately chose the gimmick,” Kelly said.
—with files from The Canadian Press
© 2025 Global News, a division of Corus Entertainment Inc.
