GST holiday ‘a flop’ with few small retailers reporting higher sales: CFIB
Only a small portion of small businesses saw stronger sales over Canada’s two-month tax holiday.
That’s according to new research from the Canadian Federation of Independent Businesses (CFIB) released before the GST holiday ends on Feb. 15.
Just 5% reported higher sales compared to the same period last year. Of those, only 4% of businesses in retail and 15% hospitality saw an increase in their sales.
“By all accounts the government’s GST holiday was a flop for small businesses,” said Dan Kelly, CFIB president, in a release. “For many retailers it was an administrative nightmare to get point-of-sale machines compliant just before Christmas, let alone sort out which Lego sets the holiday applied to, or how many items in a gift basket had to be tax-free for it to qualify.”
READ: CFIB calls on Ottawa to compensate small firms for costs to implement GST holiday
Most (66%) small firms impacted by the tax break said their sales stayed about the same but also faced a number of challenges.
Those include reprogramming point-of-sale systems and the associated costs, additional administrative workload, training staff and managing customer inquiries.
CFIB said retailers received conflicting information from the Canada Revenue Agency (CRA) and Finance Canada as to whether participation in the holiday was mandatory.
“The past few months have been incredibly challenging and filled with uncertainty for many small firms. As they transition their systems back to the original amount of GST, we urge the CRA to be lenient and waive taxes owed, penalties, and interest for good faith errors made during the rushed implementation period. The government should also provide affected businesses with a $1,000 credit in their GST/HST accounts to offset programming and administrative costs they incurred back in December,” Kelly said.
Speaking with reporters on Jan. 28, Metro president and CEO Eric La Flèche said the Ontario and Quebec grocer saw minimal benefits from the holiday.
“We did not see a spike in the tax holiday on those products. I'm sure it was appreciated by customers, but speaking for us in both food and pharmacy, we didn't really see any spike in volume or demand because of it. It was a lot of work for our teams to get this done in December... but we got it done, and it is what it is,” he said.
