The federal government's GST holiday has been in effect for a week and some Toronto businesses say it's been a challenging transition.
Christina Kotiadis, owner of Lemon & Lavender, a retail store in Bloor West Village, said the biggest issue is deciding which products qualify for the tax break.
“I've talked to some other small businesses that carry the same products as me and sometimes we'll have two completely different ideas about what we think,” she told CBC Toronto.
That has caused him some concern about mismarking items and some customers are also confused, Kotiadis said.
The Canadian Federation of Independent Business (CFIB) reports that many small businesses did not support the tax holiday before it began. At the end of November, CFIB data indicated that only four percent of small business owners believed they would see strong sales. Polled owners expressed concern about the cost of reprogramming their point-of-sale systems and the short time it took to implement the change.
This Saturday marks the start of the Liberal government's two-month GST/HST holiday that it says will give Canadians a break on the cost of some essential goods. Still, some say the list of tax-free items is confusing for businesses and consumers.
CFIB President Dan Kelly said the break has been a mess for many small businesses.
“God help the small business owner who might have 3,500 items and have to sort through each one by hand to figure out if it applies,” he said.
Integration is easier in some areas than others
Kelly said he felt a more measured approach, where the needs of each area were considered, would have worked better. For example, he said he's easier on restaurants than retailers.
He said, 'everything in the restaurant has gone from being taxed to not being taxed. “So at least for them, they don't have the personality to try to figure out what products are under its scope.”
That's often the case for Don Chapman, owner of Lazy Daisy's Cafe on the corner of Eastwood Road and Coxwell Avenue.
“My sense is that people may be spending a little bit more in both restaurants and retail,” she told CBC Toronto.
Customers don't always know about the tax break, but once they see the bill they're often willing to treat themselves to something more, Chapman said.
She is hopeful that the GST holiday can become an annual tradition.
“If this is repeated next year, people will go, 'OK, GST holiday, let's spend.' And the longer it goes on, the more confident people are to spend more,” Chapman said.
However, he thinks there needs to be an easier way for businesses to implement these changes and clear guidelines on what items are covered.
Retailers like Megan Munro, owner of Caribou Gifts at the Junction, agree that implementing the changes was the hardest part of the process.
“It took a really long time, like updating our entire catalog took at least eight hours,” she said.
Overall, Munro said she thought taking the day off was a bad idea and wouldn't benefit her business much.
“We haven't noticed that it's driving anyone more for those tax-free deals,” she said.
Too early to see benefits for businesses
Munro said she also questions what happens after the holiday rush is over. As a gift shop owner, she said she doesn't realize the tax break will drive customers to her store in January and February.
Even crorepatis don't know how to spend the new year. She said it's too early to tell her how many sales are coming because of the tax break.
“(Last weekend) we saw thousands of customers come through the doors,” she said. “It's impossible to know if those people came because of Christmas or if you know it's a good time to buy because it's tax-free.”
The GST tax holiday ends on February 15, 2025.
