The government of Canada has announced its plans for a temporary tax break by exempting GST/HST on certain items during the holiday season from Dec. 14, 2024 to Feb. 15, 2025. The legislation to enact the tax break has cleared the House of Commons and is now awaiting Senate approval.

The tax break applies to clothing, footwear, diapers, car seats, toys for children, jigsaw puzzles, physical video games, consoles and controllers, physical books, printed newspapers, Christmas and similar decorative trees, and food or beverages.

The purpose of this tax break is purportedly to offer financial relief to Canadians amid high food and housing costs. Minister of Public Services and Procurement Jean-Yves Duclos justified the decision as follows:

“Although inflation is down and our economy is strong, the cost of living remains a challenge for many middle-class Canadians. That is why the federal government is introducing a two-month tax break on groceries and everyday essentials.”

Government estimates suggest that someone spending $2,000 during the tax-free period could save between $100 and $300, while Pedro Antunes, the chief economist of the Conference Board of Canada, projects average household savings of $100 to $200.

But while the tax break will indeed put more money into consumers’ pockets as the government claims, whether it will actually ease inflationary pressures is uncertain.

Tax reductions often create an........

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