OTTAWA — The Liberals' GST holiday legislation is expected to pass in the House of Commons on Thursday night, even as Conservative Leader Pierre Poilievre said his party will vote against the tax break.
The two-month measure applies to dozens of items commonly purchased over the holidays, including children's clothes and toys, video games and consoles, Christmas trees, restaurant and catered meals, wine, beer, candy and snacks.
Poilievre, a vocal advocate for cutting taxes, said the GST break "isn't a tax cut."
"This is an inflationary, two-month temporary tax trick that will drive up the cost of living," Poilievre said on Thursday.
"My tax cuts are not just about lowering costs, they're about sparking more production. By axing the carbon tax, our businesses can hire more workers and produce more goods. By axing the sales tax, we're going to get 30,000 extra homes per year," Poilievre said, referencing his proposals to scrap the federal fuel charge and the GST charged on new home builds under $1 million.
Liberal House leader Karina Gould shot back that Poilievre "would rather play politics than support Canadians" and argued the tax measure would boost consumer confidence at a time when Canadians are worried about the cost of goods.
In a statement sent out shortly after the Conservative leader's news conference, NDP Leader Jagmeet Singh said Poilievre is "bootlicking for billionaires."
"When Poilievre was in cabinet, the Conservatives slashed corporate tax for multi-billion-dollar corporations to 15 per cent from 22 per cent," Singh said. "Now he’s whining about middle-class families saving a little money over the holidays."
The NDP only agreed to support the bill after the Liberals separated the GST break from a promise to also send $250 to some 18.7 million working Canadians in the spring.
The NDP wants that benefit expanded to non-working seniors and people with disabilities who don't have employment income.
University of Calgary economics professor Trevor Tombe said any change on fiscal policy that increases demand, whether it's on the revenue or spending side, can affect prices.
"If you provide tax reductions, that increases people's disposable income, so families and individuals, they just have more money at the end of the day to purchase things," Tombe said.
"But — and there's a big 'but' here — these are not very big changes in either taxes or people's disposable income, in the form of the $250 cheque. And so it's unlikely to have a measurable effect on inflation or on prices."
Tombe said his main critique of the measures is that they are costly and the money would be better spent on policies that would address Canada's long-term economic performance.
Liberal MP Ryan Turnbull, who is Finance Minister Chrystia Freeland's parliamentary secretary, said during the debate on the legislation on Wednesday evening that the goal is to help Canadians after multiple budget shocks from high inflation due to the COVID-19 pandemic and climate disaster-related supply chain disruptions.
The government said someone spending $2,000 on eligible items over the two-month period will save between $100 and $260, depending on the province.
The difference is because the four Atlantic provinces and Ontario have a harmonized sales tax with Ottawa, which means the entirety of that — 15 per cent in the Atlantic and 13 per cent in Ontario — will be lifted.
Other provinces will only save the five per cent GST unless those governments choose to lift their provincial sales taxes as well.
Ottawa has not offered compensation to offset provincial revenue losses for governments that choose to match the tax cut.
The temporary tax cut is expected to cost the federal government about $1.6 billion. Ontario said Wednesday it will cost its treasury about $1 billion to remove the provincial portion of the harmonized sales tax off the items, though several things covered by the federal GST holiday are already permanently exempted from the provincial portion.
People in Alberta, which has no provincial sales tax, will see a five per cent savings.
The Liberals needed the NDP's help to suspend debate on a Conservative motion that has tied up the House of Commons for nearly two months.
The Conservatives refused to end that debate until the Liberals handed over unredacted documents related to alleged misspending at a now-defunct federal green technology fund.
This bill is the first new legislation to be debated in the House since the end of September, and Gould said the measure needs to pass through the House now so that it can be put in place by Dec. 14 and make a difference during the holiday sales season.
This report by The Canadian Press was first published Nov. 28, 2024.
— With files from Kyle Duggan in Ottawa
Nojoud Al Mallees, The Canadian Press
