Small businesses do not support the proposed two-month GST/HST holiday, according to a flash survey conducted by the Canadian Federation of Independent Business. Small firms have major concerns and questions over the timing, process and administrative costs associated with the change. Over 3,500 small firms responded to this survey conducted on November 26-27, 2024.
“A majority of small firms oppose the planned GST/HST holiday – and this rises to 62% among those required to implement it,” said Dan Kelly, CFIB president. “Only 4% of small business owners believe they will have stronger sales as a result, with 66% of respondents suggesting it will simply shift sales into the tax holiday period.”
Small firms in the sectors that will be required to make changes to accommodate the temporary tax holiday report many concerns:
- 75% say it will be costly and complicated to implement the holiday – small firms report a median of $1000 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 holiday report consumers will delay purchases and 54% believe consumers will return products to repurchase during the holiday period
“This legislation was introduced just yesterday – right in the middle of the busiest retail week of the year with Black Friday, Small Business Saturday and Cyber Monday,” Kelly said. “Small firms – particularly those in retail – do not have the time or resources to effectively make the changes to accommodate this temporary change and very few believe there will be any net benefit.”
It is also important to note that this GST/HST holiday does not just affect retailers and restaurants. Manufacturers, producers and distributors who sell exempted items to other businesses will also need to change processes to exempt the sales taxes during the two-month period. Many are unaware of this requirement.
“Instead of a complicated, temporary tax holiday, small businesses would far rather government focus on permanent tax changes, such as cancelling the 19% increase in the carbon tax planned for April 1,” Kelly added. “But if government proceeds with this plan, CFIB is calling on the Department of Finance to give affected small firms a credit of a minimum of $1000 in their GST/HST accounts to cover the administrative and programming costs.”
Further, CFIB is calling 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.