The GST “holiday”—a $1.46 billion tax break for working Canadians over the holidays—took effect on December 15th, leaving small business owners in the thick of implementing its changes. While this might sound like a festive gift, it’s anything but for small business owners—the very backbone of Canada’s economy. This policy, announced months ago, was implemented without consulting the people it impacts the most, leaving small business owners scrambling to execute an ill-conceived plan during their busiest time of the year.
No Consultation, No Consideration
Small business owners were not asked for their input. As one client vented on social media:
*”What an unmitigated cluster for small business!! I can’t wait to spend December 12, 13 & 14 manually reviewing every SKU I sell to temporarily adjust its tax status. Only to be able to do it again at Valentine’s Day. What a nightmare!!!!”
This direct quote underscores the frustration and chaos this policy is causing. The implementation demands time, energy, and resources that small business owners simply don’t have.
The Hidden Costs
This so-called “holiday” comes with significant costs for small business owners:
- Staffing Costs: Employees must manually adjust prices and tax statuses for countless products.
- Bookkeeping and Accounting Costs: This temporary tax change spans two fiscal years, potentially adding hundreds of dollars in additional professional fees.
- Training Costs: Businesses must train employees on the nuances of this new tax system.
- Customer Service Costs: Owners and staff are fielding endless questions, essentially becoming GST experts overnight.
I’ve done some quick math, based on the fact that 29% of Canada’s 1.19 million small businesses operate in the retail and wholesale trade sectors. At a conservative estimate of $1,500 per business to manage the associated costs, the total burden on small businesses ranges between $350 million and $500 million. This is a staggering financial hit, borne entirely by the very businesses already under immense pressure.
Confusion and Complexity
The policy’s rollout is riddled with confusion, making it nearly impossible for businesses to comply seamlessly. Consider the following:
- Restaurants: Whether GST applies depends on how food is ordered. If an eating establishment bills directly for delivery, GST is waived. However, if ordered through a third-party platform, the delivery fee is taxed.
- Food Products: Items like protein bars and drinks qualify for GST relief only if they meet criteria such as being considered food by Health Canada and competing directly with similar products. The ambiguity leaves business owners guessing.
These inconsistencies add to consumer confusion, creating frustration that’s often unfairly directed at small business owners. One jewelry store owner shared a chilling story of being threatened for not discounting GST—an example of how poorly communicated policies can spark hostility.
The Productivity Toll
Canada already faces a productivity challenge, and this policy exacerbates it. Small business owners and employees are burned out, grappling with:
- Supply chain issues from the Longshoreman’s strike.
- The low Canadian dollar.
- Threats of U.S. tariffs.
The GST “holiday” adds yet another layer of complexity and inefficiency during a season when every moment counts.
A Better Approach
Instead of imposing costly, poorly planned policies, the government should invest in initiatives that genuinely support small businesses. For example, the 2013 Micro-Business Training Grant, with a budget of less than $2 million, provided essential training in areas like hiring, productivity, systems, and bookkeeping. The program was a massive success, equipping small business owners with tools to grow and sustain their operations.
If the government truly wants to help working Canadians, the focus should be on reducing small business failure rates and fostering sustainable growth—not implementing short-term solutions that shift the burden onto the very people driving our economy.
Final Thoughts
The GST “holiday” is a glaring example of what happens when policies are made without consulting those most affected. Small business owners deserve better. They need policies that alleviate stress, not add to it. Let’s redirect resources toward meaningful support that empowers small businesses to thrive year-round, not just survive the holiday season.
