Temporary GST break gets mixed reaction from Manitoba businesses
Timing of 2-month tax break a concern for some, but restaurant association hopes it will boost spending
Manitoba business owners are gearing up for a temporary federal tax break this holiday season, and while some welcome it, others worry about its timing and the amount of work it will require.
The federal government announced new measures on Thursday intended to alleviate affordability pressures Canadians have experienced in the post-COVID era, including a two-month holiday on the federal goods and services tax for some items.
From Dec. 14 to Feb. 15, 2025, the five per cent GST won't be charged on select goods, including any prepared foods, restaurant meals, alcohol, children's clothing and toys.
But the co-owner of a gaming and hobby store in Dauphin said there is a disconnect between the tax break and the way stores like his operate, and he fears the GST holiday might add work for his employees without having a significant impact on earnings.
"They're including all board games, puzzles, playing cards — basically everything we deal in, but not quite everything, which means we can't blanket remove it from our store," said Joe Houston, who co-owns Go Beyond Games.
Over the next few days, as the business is already dealing with moving to a new location, staff will have to adjust "every single item in the store" to remove the GST, he said, which will require long hours.
"For the thousands of small businesses operating in Manitoba, it is adding a burden of labour, which I don't think anyone is quite aware of," said Houston.
Timing a concern
Another concern for him is that most of the store's Christmas inventory has already been purchased, meaning the store has already paid the tax on it.
"I understand that the intent of the tax break is in good faith," Houston said. "I just don't know that the connection to small business is there to understand it from our perspective."
Logan Broome, manager of the Mega Deals liquidation store in Dauphin, shares Houston's concerns.
"No one put out any guidelines," she said. "Anything that a business has already paid GST on, what are we supposed to do?"
She also worries that until the tax break comes into effect, businesses like hers — which don't sell essentials like food — may see a drop in customer traffic, as people hold off until after Dec. 14 to purchase items.
"This is going to be scary," Broome said. "People are going to wait, and it's going to cost small businesses quite significantly."
The owner of a farm south of Steinbach that sells Christmas trees — another item that will get a GST break come Dec. 14 — is also worried about the timing.
CD Trees owner Cliff Freund said that doesn't align with holiday shopping patterns.
"By the 14th, a lot of our customers, 80 to 90 per cent of the people, have their tree already," he said.
Freund said despite a continued increase in the price of Christmas trees, fuelled by a shortage in North America, he doesn't think people will hold off to get the tax break.
Win for restaurants: association
But the Manitoba Restaurant and Foodservices Association is welcoming the GST break, especially in the weeks after the holiday season, which is typically one of the slowest times of the year in the business.
Shaun Jeffrey, the advocacy group's executive director, said the GST suspension is a win for the industry, and may encourage customers to head out for restaurant meals.
He also hopes it may change their spending habits for the better — "ordering that dessert … [or] that extra drink, or maybe having an appetizer because they're saving that five per cent," he said.
He's confident that restaurants will be able to adapt to remove the tax from bills in two weeks, but that could be a "convoluted process" that will require additional staffing at what is a "scramble time of the year," he said.
"It is also making sure we're taking into consideration what this is going to look like," he said. "Is this going to cut down business going into the tax holiday and then spike that business?… It's tough to be able to kind of gauge that."
But he said the news is overall good for the restaurant industry, as it continues to struggle to keep up with reduced customer spending and soaring labour, insurance and food costs.
He said more than 50 per cent of restaurants in the province aren't breaking even, compared to about 19 per cent before the COVID-19 pandemic.
"We need it now more than ever," Jeffrey said.
WATCH | GST holiday may give ailing restaurant industry a boost:
With files from Chelsea Kamp, Zubina Ahmed, Cory Funk and Marcy Markusa