Published In The Great North Arrow, January 1, 2025: GST/HST Tax Break - Blessing or Burden
- jim Young
“Why does a small tax increase cost you two hundred dollars and a substantial tax cut save you thirty cents?” - anon
The message was kind of a cross between a lesson to accept what I could not change and be grateful for the things I have in life.
I took that wise lesson to heart and to this day, I do not object to my responsibility to pay my fair share of taxes; at least in principle.
What I do object to is the government’s wisdom (or lack thereof) in defining what a “fair share” of my taxes are and their ability (or lack thereof) in the management of the revenues they receive from taxation.
But just like everyone else… I will gladly accept any tax break offered to me.
So why shouldn’t I reap the benefits of the government’s GST/HST tax break that came into effect on December 14, 2024? Now I don’t like to look a gift horse in the mouth, but I’m not sure I understand the purpose of this tax break nor the wisdom of it at any level.
More Money In Your Pocket
A title on the Government of Canada’s website reads: “GST/HST break: More money in your pocket.” Typically when a politician is putting money in YOUR pocket instead of his or her own, the intent is to encourage the public to spend more money in the hopes of stimulating the economy.
Another reason might be to win your favour in an upcoming election.
Sorry Mr. Trudeau, if either of those were your intent you failed miserably.
These past few years it has been increasingly difficult to add to my savings account, so any reduction I receive in taxation will not likely encourage me to spend more. Instead, any savings I realize from the tax break will be put into just that - “savings” to hoard away for “that proverbial rainy day.”
As for the second reason (to win a politician’s favour), well Mr. Trudeau, you’ll just have to try to figure it out for yourself why THAT’S not gonna happen. Does the expression “You can fool some of the people some of the time” ring a bell?
At What Cost?
First of all, I’d like to know something. What are we as Canadians giving up, with the lost HST/GST revenue for these next two months? According to the Government of Canada website “Removing the GST from these qualifying goods for two months will provide an estimated $1.6 billion in federal tax relief.”
Doesn’t the government need that money? Where will you get the money to replace whatever it was earmarked for in the first place?
And if it isn’t needed, why have we been paying this tax all along? Why can’t this tax break be permanent? If it goes on for long enough, perhaps my savings account will get sufficiently topped up that I can feel confident enough to start putting this money into my pocket to spend and help boost the economy. That is unless you add ANOTHER tax to take its place.
As for the “wisdom” of the implementation of the HST/GST tax break, if you will indulge me, I would like to provide you with some of my observations of the folly of it.
Credentials
You should know that my opinions here are substantiated with some facts to back up the claims I make to the best of my ability. For a few years now I have been tracking almost ALL of my personal expenditures. (One of the perks or perils of being OCD.) Admittedly I miss a few, but not very many and I’m sure my local vendors will support this claim knowing how often I request receipts (probably to their annoyance) for even the smallest purchases of things like a bag of potato chips, a small packet of gum or even a single edition of the Great North Arrow Newspaper. (There’s a nickel to be saved there.)
Personally, I sometimes find it difficult to put a lot of credibility into statements made by others that begin with “I believe I spent about…”, “I paid in the neighbourhood of…” or “It cost me somewhere between…”
So when I tell you that I saved “x” number of dollars on something, you should know that I have facts to back up my statement. Of course even those facts are always presented with E.&O.E. If lawyers and bankers who are respected resources that we depend on to be accurate claim E.& O.E. in their statements (particularly their invoices) then I should also be afforded the same allowance. (Editor’s note: For anyone who may not be aware, E.&.O.E. is an acronym for “errors and omissions excepted”.)
But I believe there are fewer E.&O.s in my record keeping than you might expect of many others.
Ridicule me as a “fact-checker” if you will but I have always been proud of my level of accuracy.
Savings To Date
So with that in mind, with a clear conscience I can tell you that in the first 5 days of the government HST/GST rebate, I have calculated that I have saved a sum of $33.47.
That’s not too shabby. I’ll take it. Thank you Mr. Trudeau.
I voluntarily declined my very first GST rebate of 5 cents on December 14 as I saw the difficulty that processing my transaction was causing a small business employee on the first day the tax break took effect. The cashier’s frustration and struggle did not justify the value of the savings to me. Apparently I have a recourse to apply to have the government reimburse me for this over payment, but only if I have enough claims that add up to a total of $2.00 or more.
I will meet that minimum requirement and you can bet I will be applying for these rebates at the end of the term. (Another little OCD quirk of mine.) As I mentioned earlier I do not begrudge paying my fair share of taxes but likewise I believe I am equally entitled to my fair share of tax refunds and rebates.
Every individual's savings will vary according to their circumstances and lifestyles, but let’s take a look at more of my transactions since those first 5 days.
At the time of this writing and almost 2 weeks into the tax break, my savings now stand at almost $65. More if you count up the rebates I will be applying for at the end of the term, along with my initial five cent overpayment.
Opting Out
One restaurant my wife and I visited has chosen to “opt-out” of the GST/HST Tax Break. So I will save that receipt and apply for another $10 tax refund. (Hint: Be sure to scan the receipts you save to apply for your tax refunds. Thermal printers are currently used for many retail receipts. These have a tendency to fade very quickly rendering them unreadable. When it comes time to prove your overpayment of taxes, the government is NOT likely to take your word for it.)
Can retail businesses even do that?
Here’s what the Government of Canada has to say about that. “You should automatically receive this tax break from the seller on the qualifying items you purchase…”
Notice the wording is “You should…” not “you shall…” or “you will…” or “you must…”.
“You should…” means something very different from those words.
I couldn't find anything on the Government of Canada’s website regarding the rules for opting out. However, according to a report on CP24.com, “Rechie Valdez, the federal minister of small business, told reporters that the government “expects” retailers to comply.”
At the same time, CP24.com also reported, “The government confirmed that, in fact, no business, whether it’s a manufacturer, wholesaler or even a retailer, is required to participate in the GST, HST holiday. If they don’t, the business or even the final end consumer can go back to the Canada Revenue Agency and request a refund.”
The small business that I spoke to claimed that it would cost them $1,000 to have their cash registers re-programmed to accommodate the tax break for a 2 month period. Large businesses and chains may be able to accommodate and absorb extra costs like that, but it’s a deal breaker for smaller operations.
What’s The Break / What’s The Deal?
If we take a look at the rest of my purchases to date, we will see that ALL of those GST savings were a result of purchases I made on alcohol, junk food and eating out.
Let’s take a look at what goods are eligible for the GST/HST tax break. According to the Government’s press release, “groceries (aren’t most groceries already tax free?), restaurant meals, drinks, snacks, children’s clothing and gifts” are some of the items that will be tax exempt. Will the diamond tennis bracelet you got your wife or mistress for Christmas count as a gift? Don’t count on it.
The “groceries” referred to in this list are mostly things like “junk food” that the government originally decided weren’t essentials for you in the first place.
And what’s the reasoning for making beer and wine tax exempt but not liquor?
But none of these are items I am going to purchase more of just because they are costing me less which both my wife and my doctor are at least grateful for.
The exemption on things like children’s clothing and car seats is admirable but that begs the question “Why are they not tax exempt in the first place?” Is the government suggesting children’s clothing and car seats are comparable to junk food and non-essential?
What about our pets? Pets are often used for emotional support and are widely regarded as effective for decreasing stress, improving heart health and helping children with their emotional and social skills. So why aren’t pets foods eligible for the GST/HST Tax break? In fact, why aren’t they exempt from taxes on an ongoing basis since the government has $1.6 billion dollars that it doesn’t really seem to need anyway?
Why does the government seem so willing to give us tax breaks on things that are going to kill us and not on things that will heal us?
What Else?
We’re just 16 days into the HST/GST tax break and these are just some of my observations to date. It will be interesting to see what other things come to light in the next 46 days.
Has this just been another ill-planned and feeble attempt by Trudeau to help win support that he hadn’t really thought through?
Of course these are just my thoughts on it. Maybe the HST/GST tax break has really benefited you. If so, please write or email the Great North Arrow (address and email found on page 3) and let us know your thoughts on it.
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