‘Tax holiday’ bill expected to pass in House of Commons

Legislation to establish a two-month GST holiday is expected to pass on Thursday.

The bill, introduced on Wednesday afternoon on behalf of Finance Minister Chrystia Freeland, was supported by the NDP to temporarily halt a Conservative filibuster.

The NDP agreed to back the bill only after Freeland separated the GST holiday from a promise to send $250 to most working Canadians in the spring. The NDP has called for the benefit to also be extended to non-working seniors and individuals with disabilities who lack a working income.

Liberal MP Ryan Turnbull, Freeland’s parliamentary secretary, explained during the debate that the legislation aims to assist Canadians who have faced budget challenges due to high inflation following COVID-19 and disruptions in supply chains caused by climate disasters.

The GST holiday will apply to a variety of items commonly purchased during the holiday season, including children’s clothing and toys, video games and consoles, Christmas trees, restaurant meals, wine, beer, candy, and snacks.

According to the government, someone spending $2,000 on such items during the two-month period could save between $100 and $260, depending on their province. The difference arises because the four Atlantic provinces and Ontario have a harmonized sales tax with Ottawa, meaning the entire tax – 15% in the Atlantic and 13% in Ontario – will be removed. Other provinces will only see a savings of 5% from the federal GST, unless provincial governments also decide to eliminate their own sales taxes.

This move is expected to cost the federal government about $1.6 billion. Ontario has estimated it will lose about $1 billion in revenue to remove its provincial portion of the harmonized sales tax from these items, although some of the items covered by the federal GST holiday are already exempted from the provincial portion.

Alberta, which has no provincial sales tax, will benefit from the full 5% federal GST savings.

Conservative finance critic Jasraj Singh Hallan criticized the GST holiday during the debate, calling it "nothing but a cheap gimmick and something just to buy votes from Canadians."

NDP Leader Jagmeet Singh stated that the bill should pass, despite Conservative Leader Pierre Poilievre’s opposition. "New Democrats won’t let him win the fight," Singh said, while also calling for the GST to be permanently removed from daily essentials and monthly bills for internet, phone, and home heating.

The Liberals needed the NDP’s support to suspend debate on a Conservative motion that had stalled the House of Commons for nearly two months. The Conservatives insisted that the Liberals release unredacted documents regarding allegations of misspending at a defunct federal green technology fund.

This bill marks the first new legislation to be debated in the House since September.