Senators Ponder Benefits of GST Holiday in Last Stage of Bill Review

The Senate of Canada building and the Senate chamber are pictured in Ottawa on Feb. 18, 2019. The Canadian Press/Sean Kilpatrick

As the Senate went through the third and final reading of the government’s Bill C-78, which would give Canadians a two-month GST holiday, some senators criticized the legislation as insufficient at a time when Canadians are struggling with rising costs, while others came to the bill’s defence.

Colin Deacon from the Canadian Senators Group said he is “completely against” the bill because there is “no underlying logic” to the items that have been chosen for the GST holiday. He said the Canada Revenue Agency, which would be responsible for implementing the bill, wasn’t consulted, and small business owners will face difficulties in implementing the measure with different items having differing tax rules.

“This policy shows no consideration for small businesses who are being forced to implement this measure,” Deacon added. “I have personally heard small business owners expressing real concern over customer backlash if they refuse to believe the unexplainable.”

On Nov. 21, Prime Minister Justin Trudeau proposed a two-month holiday for Canadians from the federal sales tax amid cost-of-living challenges. The legislation will exempt items like groceries, restaurant meals, beer, wine, certain pre-mixed alcoholic beverages, and certain items for children from the GST.

“The tax break over the next two months is going to help on the costs of everything as we approach the holidays, as we get into the new year,” Trudeau said in a Nov. 21 press conference. “These are things that recognize that people are squeezed, and we’re there to help.”

Independent Senator Lucie Moncion said the legislation will address the “very specific challenge” of rising costs and has been calibrated to support consumers and businesses without raising inflation. “It will help Canadians make ends meet. The measure is limited and targets clearly-defined sectors, including some that are feeling the pinch of the current economic climate especially hard,” she said.

Conservative senators, similar to their fellow caucus members in the House of Commons, are opposed to the bill.

Conservative Senator Donald Plett, who is leader of the Opposition in the Senate, said the legislation would only amount to around $1.05 in savings per day for each Canadian, with the wealthier saving more money. He also criticized the bill for applying to non-essential items like snacks, toys, and newspaper subscriptions, as opposed to perishable groceries, prescription medication, gasoline, or car repairs.

Conservative Senator Claude Carignan called the legislation “deeply flawed” and a “ploy to win votes.” He acknowledged that some senators had said they would abstain from voting on Bill C-78 and called for them to instead “take a position for the 450,000 citizens you represent and vote against this bill.”

Independent Senator Éric Forest criticized the legislation for not being targetted enough, saying a two-month holiday on a limited number of items was “not a substantive measure likely to have a significant impact” on households.

“When this measure comes to an end in March, the cost of essential goods, such as housing, heating, food, and clothing, will be just as high as before,” he said, adding that some retailers and restaurants may decide to cancel out any benefits by raising their prices.

Forest said while he did not want to “throw the baby out with the bathwater” by voting against the legislation, he would like to see more carefully targeted measures to help Canadians.

The Senate is likely to pass Bill C-78, as it has not failed to pass a government bill since 1996, when it rejected legislation providing a liability shield for private managers of Toronto Pearson International Airport.