Ontario supports federal GST holiday, will not ask for lost revenue

Ontario says Ottawa’s tax holiday will cost the province $1 billion, but it will support the GST break for consumers.

Last week, the federal Liberal government announced plans to pause the GST for two months on prepared food, toys, some types of alcohol and other holiday season staples.

The tax break is part of multi-billion-dollar affordability package Prime Minister Justin Trudeau introduced to alleviate cost-of-living pressures.

In provinces like Ontario, where the provincial and federal sales taxes are blended together into a harmonized sales tax, the entire HST would be removed from such items.

Ontario Premier Doug Ford has said he is supportive of the move.

Now, the office of Finance Minister Peter Bethlenfalvy confirms it will remove the provincial sales tax on items not already covered under provincial rebate.

Ontario has long removed the provincial portion of the harmonized sales tax from similar items listed in Ottawa’s GST break plan, such as children’s clothes and some food.

The premiers of New Brunswick and Prince Edward Island have said they want to be compensated by Ottawa for the provincial revenue lost during the tax holiday.

As in Ontario, in the Maritime provinces the HST includes the provincial portion of the sales tax but is administered by the Canada Revenue Agency and is applied under the same legislation as the GST.

As part of the affordability package announcement Trudeau also proposed the ‘Working Canadians Rebate’, a plan to send $250 cheques to the 18.7 million people in Canada who worked in 2023 and earned $150,000 or less

However, this part of the bill is currently being debated as the NDP want the benefit expanded to non-working seniors and people with disabilities who don’t have a working income.

Bloc Quebecois Leader Yves-François Blanchet also said the party will not support the proposal unless the benefit includes seniors.

The GST holiday rebate portion of the bill is expected to be passed Nov. 28 in the House of Commons and will go into effect Dec. 14.

With files from The Canadian Press, first published Nov. 27, 2024.

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