As Canada’s tax ‘holiday’ ends, small businesses say it was a ‘flop’: CFIB – National

Canada’s tax “holiday” is set to end on Friday, but new numbers show a majority of small businesses in the country saw little change in sales.

The data comes from the Canadian Federation of Independent Business (CFIB), which surveyed 2,345 members between Jan. 9 and 31.

“By all accounts the government’s GST holiday was a flop for small businesses,” said Dan Kelly, CFIB president, in a statement.

According to the survey, just five per cent of small businesses said they saw stronger sales compared to the same period in 2024.

When it came to which sectors benefitted, of the five per cent who saw a boost, just four per cent of that number were retail stores while 15 per cent of hospitality businesses saw a sales increase.

Last week, Moneris released its own data which found no year-over-year increase in spending by Canadians between Dec. 14, when the “holiday” began, and Jan. 15.

Across Canada, Moneris’ data actually showed overall spending was down by four per cent and the number of transactions seen by businesses during this period decreased by one per cent.

In Ontario, which matched the federal government’s tax “holiday” by removing its provincial harmonized sales tax (HST), spending was down eight per cent.

The CFIB says a total of 66 small firms impacted saw their sales stay about the same, but faced multiple challenges administering the “holiday,” including reprogramming point-of-sale (POS) machines which will need to be reprogrammed again, additional administrative workload, training staff and managing customer inquiries.

“It was an administrative nightmare to get point-of-sale machines compliant just before Christmas, let alone sort of which LEGO sets the holiday applied to, or how many items in a gift basket had to be tax-free for it to qualify,” Kelly said.

Kelly went on to call for the federal government to provide affected businesses a $1,000 credit in their “GST/HST accounts to offset programming and administrative costs they incurred back in December.”

While small businesses say they saw little impact, Restaurants Canada said last week they want the holiday to be made permanent due to early signs it’s helped cash-strapped Canadians dine out more often.

The organization told Global News it did not have new data to provide at this time in terms of exact sales from the holiday, but in a report released last Thursday it said it expects a $1.5-billion boost in food service sales over the 60-day period than if there had been no “holiday.”

That was based on data from the first two weeks of the holiday from OpenTable showing an 18-per cent jump in seated diners compared to December 2023.

But though there’s mixed sentiment on the “holiday,” the federal government has signalled it is unlikely to stick around with a Finance Canada official telling Global News on Friday that it was a “temporary measure to provide relief.”

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