Excited about a two-month GST relief? Small businesses aren’t — here’s why

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The Liberal government has tabled a bill for temporary GST and HST relief, and the House of Commons is expected to vote on it on Thursday.

The two-month cut will apply to essential items, prepared foods and snacks, restaurant meals (dine-in, takeout, or delivery), children’s clothing and footwear, diapers, toys, Christmas trees, and other items — even gaming consoles! A complete list of the eligible items can be found here.

While many Canadians are enthusiastic about the GST relief, most small business owners nationwide aren’t, according to a survey of more than 3,500 small firms conducted by the Canadian Federation of Independent Business (CFIB).

“Small firms have major concerns and questions over the timing, process, and administrative costs associated with the change,” the CFIB shared in a report Thursday morning.

CFIB President Dan Kelly shared that 62% of firms required to implement it oppose the GST relief. Only a diminutive 4% of small business owners believe the measure will result in more robust sales.

GST relief and small biz concerns

The CFIB shared the following worries that small businesses mandated to apply the measure have:

  • 75% say it will be costly and complicated to implement the holiday – small firms report a median of $1,000 in additional costs to reprogram their point-of-sale systems to remove and then reinstate the tax
  • 65% say there is not enough time to implement the change
  • 71% say big businesses and online giants will have the upper hand in benefitting from the holiday
  • 68% say it will be difficult to determine which items are temporarily tax-exempt
  • 66% of retailers of goods subject to the tax holiday report that consumers will delay purchases, and 54% believe consumers will return products to repurchase during the holiday period

Kelly noted that smaller retain firms, in particular, don’t have the time or resources to make the changes required to accommodate the temporary relief.

“Instead of a complicated, temporary tax holiday, small businesses would far rather the government focus on permanent tax changes, such as cancelling the 19% increase in the carbon tax planned for April 1,” Kelly added. “But if the government proceeds with this plan, CFIB is calling on the Department of Finance to give affected small firms a credit of a minimum of $1,000 in their GST/HST accounts to cover the administrative and programming costs.”

The Bureau shared that manufacturers, producers, and distributors who sell exempted items to other businesses will also have to undergo challenging process changes that may not be worth the benefits to them and that many are unaware of this requirement.

The CFIB also called on the government to order the Canada Revenue Agency to “forgive the taxes owed, penalties, and interests for any good faith errors made by small firms rushing to implement this change.”

A tumultuous time

Many small business owners say they’re already having a rough time due to the Canada Post strike.

“As we approach the holiday season, small businesses are counting on Canada Post to deliver their goods across the country,” Minister of Small Businesses Rechie Valdez posted on Wednesday in a plea to the postal workers’ union.

Negotiation talks were suspended during the peak holiday shopping season, just ahead of Black Friday and Cyber Monday, adding to the anxiety. As of now, more than 11 million packages are undelivered.

Still, there’s support for the Canada Union of Postal Workers, with many Canadians showing solidarity and stressing the need for their bargaining efforts.

If you’re looking for an alternative mail delivery service, Purolator is offering discounts.

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