One month after the federal government introduced a tax break on specific items, the policy’s impact has drawn mixed reactions from both small business owners and consumers.
While the initiative aimed to provide relief during the holiday season, some say the effort has caused more headaches than benefits.
The policy was well-intentioned but poorly executed, according to Ryan Mallough, a vice-president with the Canadian Federation of Independent Business (CFIB).
“No one from the government had spoken to anyone in the small business community about what the execution of that looks like,” he said. Business owners faced significant challenges implementing the tax break at point-of-sale systems with limited notice, leading to “confusion and frustration,” Mallaugh said.
Retailers and restaurants bore the brunt of these difficulties, he said, as they were tasked with identifying which items qualified for the tax break, sometimes down to the individual product level.
“We’ve had reports of businesses spending hundreds of hours adjusting systems and training staff,” Mallough said, adding that the temporary nature of the relief further complicated matters.
Sophia Saunders, a hospitality student at George Brown College, works in the restaurant industry.
“The tax break definitely made my workload a lot bigger,” she said. “I noticed a really big influx in people wanting to come in.”
Andrew Slatcher, a life-long Toronto resident, said he barely noticed the effects — though he appreciated groceries were a little less costly.
“There are some things I buy that are now HST-free, but I’m not really noticing the 70 cents here and there,” he said. Slatcher says no one in his life has been significantly impacted by the initiative either.
The CFIB says preliminary survey data collected from their membership indicates the tax break failed to stimulate holiday sales, with only five per cent of small businesses reporting a noticeable increase in revenue. For 70 per cent of surveyed businesses, sales remained unchanged compared to the previous year.
The survey still needs to be finalized and is expected to be published in early February.
“It seems like it was a lot of effort for not a lot of gain,” Mallough said.
Both Mallough and Slatcher say that more permanent and targeted measures could have been more effective. Suggestions ranged from reducing fixed costs like property taxes for businesses to addressing the ongoing affordability crisis for consumers.
The tax break is set to end on Feb. 15.
