Some small businesses in the Ottawa area fear the federal government’s temporary GST break on many products will be more confusing than helpful.
“Most consumers are happy about it, but the challenge is the timing. Are people going to wait until this kicks in (starting Dec. 14)? Is this going to affect the supply chain? Are businesses going to get this mad rush of customers or are we going to be able to deal with this?” said Michael Wood, a small business advocate, consultant and business professor at Algonquin College.
Dan Kelly, president of the Canadian Federation of Independent Businesses, said in a press release, that while the CFIB welcomes tax-cutting measures, “temporary sales tax holidays can add confusion and administrative complexity for small business owners.”
The government announcement comes when Canadians are expected to be spending more over the holiday season.
Tasso Vasilas, the owner of Hometown Sports Bar and Grill, a Bank Street restaurant that bills itself as Ottawa’s biggest sports bar, told Capital Current, “It might [help] for two months and then what?
“It’s very vague and very quick for something that huge to be implemented within a month.”
With his business still recovering from COVID, and the economy fragile, Vasilas says people are less likely to go out than they have been at other times.
He says he thinks the break will incentivize people to spend during the holiday season, but not to the point where it will significantly affect his profits.
He’s also unsure on how to implement the policy. “[The government] still hasn’t told us how it’s gonna work. They have said nothing,” he said. “They usually communicate through mail, but there’s the [Canada Post] strike. They don’t email, so how are we supposed to find out what we’re supposed to do?”
“We’re going to have to change our entire [sales computer] system to remove the tax only to put it back on in two months,” said Vasilas.
Wood says that the logistics of modifying a “Point of Service” system for billing customers is a significant change for most restaurants and, in this case, likely not worth it.
The tax break applies not just in restaurants and bars, but to a range of consumer goods, from children’s clothes to books and even to Christmas trees.
The tax break ends Feb. 15 and some consumers don’t believe that it’ll change much.
“For my own household, I feel a little indifferent towards these tax cuts. I actually don’t see that it’s going to be that impactful for the volume that I spend on all that kind of stuff and I’ve already bought a lot of my Christmas things,” said Andrea O’Connell, an Ottawa mother of three.
O’Connell, a frequent customer at Hometown said, “I understand [the federal government] wants to put money in people’s pockets and they want to help families and I agree that sounds like a lovely idea, but I think they probably could have chosen a less complicated way of doing that.”
The tax break will also apply to many products in convenience stores.
Prabhjot Singh, the general manager at the Prince of Wales Market, mostly agrees with Vasilas.
“The thing is, it’s tax-free for customers but we already paid the tax on that stuff … the tax on beer for us does not change at all,” Singh said. The Prince of Wales Market is not losing money but Singh feels it’s unfair that he paid taxes to stock up on products early. Had he purchased the product after the tax-break took place, it would have been at a much lower price.
According to the federal finance department, the break is meant to “give Canadians more money in their pockets. To help them buy the things they need and save for the things they want.”
The government says it is doing what it can to help small businesses out.
“Our government’s tax break is supporting our entire community by boosting neighbourhood independent grocery stores, restaurants, retailers, and small businesses that power our local economy,” said Callie Franson, a spokespeson for Rechie Valdez, the federal minister of Small Business, in a statement to Capital Current
Small business owners can call the CRA Business hotline at 1-800-959-5525 if they have further questions.
