{"id":15350,"date":"2025-02-06T22:52:38","date_gmt":"2025-02-06T22:52:38","guid":{"rendered":"http:\/\/torontotribune.ca\/index.php\/2025\/02\/06\/did-canadas-tax-holiday-boost-spending-data-shows-little-growth-national\/"},"modified":"2025-02-06T22:52:38","modified_gmt":"2025-02-06T22:52:38","slug":"did-canadas-tax-holiday-boost-spending-data-shows-little-growth-national","status":"publish","type":"post","link":"https:\/\/torontotribune.ca\/index.php\/2025\/02\/06\/did-canadas-tax-holiday-boost-spending-data-shows-little-growth-national\/","title":{"rendered":"Did Canada\u2019s tax \u2018holiday\u2019 boost spending? Data shows little growth – National"},"content":{"rendered":"


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With just one week left until Canada\u2019s tax \u201choliday\u201d ends,<\/a> new data suggests it may have had little impact in its first month.<\/p>\n

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Moneris looked into spending patterns between Dec. 14, 2024, when the tax \u201choliday\u201d began and Jan. 15. Comparing the data to the same period in 2023-24, the payment processing firm found no year-over-year increases in spending<\/p>\n

In fact, the data showed purchasing may have slowed during that time.<\/p>\n

Across Canada, the data showed overall spending was down by four per cent, with the transaction count down by one per cent and the transaction size down by three per cent.<\/p>\n

\u201cConsumers probably loved that they were paying\u2026 less in these categories, but they didn\u2019t love it enough to respond to it by going and doing more of what they just did,\u201d Sean McCormick, director of business development for data services at Moneris, said in an interview.<\/p>\n

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\u201cIf they went for dinner and they saw, \u2018Oh wow this was GST-exempt, I forgot about that,\u2019 it wasn\u2019t enough to make them go and reward that merchant or restaurant with another visit.\u201d<\/p>\n

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Transaction count refers to the number of transactions that occurred during the period Moneris studied, McCormick said, while transaction size refers to the total amount spent when the products were sold.<\/p>\n

\u201cIf transaction count was down five per cent, that means there were five per cent fewer transactions happening in that province or category in that period versus the period last year,\u201d he said.<\/p>\n

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McCormick added declines in the transaction size were expected because with GST or HST lowered on items, a bill\u2019s total would go down.<\/p>\n

The data also shows even with some provinces, like Ontario, deciding to match the tax \u201choliday\u201d and remove provincial sales tax from items not covered by provincial rebates, the number of transactions saw a decrease of three per cent.<\/p>\n

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In Ontario alone, total spending was down eight per cent.<\/p>\n

McCormick said he\u2019s not surprised transaction count was down across multiple categories, given that consumers had already endured a \u201creally challenging\u201d 18 months\u201d due to the impact of inflation on prices.<\/p>\n

While he noted data from Black Friday saw a 11 per cent increase year-over-year in spending across Canada, it may have left Canadians taking their \u201cfoot off the gas\u201d during the first month of the tax holiday.<\/p>\n

\u201cConsumers are tapped out right now and you can\u2019t take blood from a stone,\u201d he said.<\/p>\n

\u201cIf you offer a consumer a 13 per cent discount on something and they\u2019re having a hard time paying for that thing in the first place, it\u2019s not surprising that they didn\u2019t bite at the 13 per cent discount.\u201d<\/p>\n

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\n\t\t\t\tChildren’s clothing sees boost, as restaurants drop\t\t\t<\/h2>\n<\/p><\/div>\n

Not all businesses saw a decline in sales during the tax holiday, the data notes, with some retail categories seeing modest growth.<\/p>\n

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Children\u2019s and infant apparel stores were among those that benefitted, with transaction counts rising by eight per cent, although though transaction size stayed the same, likely due to the cost of sales taxes coming off the bill.<\/p>\n

Family clothing stores were the only category in the study to see an increase in transaction size,\u00a0 the total bill at checkout.<\/p>\n

McCormick suggested the two per cent increase may be because clothing for children and babies was included in tax holiday (adult clothing was not exempt), which \u00a0may have led parents to spend a bit more on tax-exempt items.<\/p>\n

Family clothing stores also saw the transaction count drop by four per cent.<\/p>\n

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McCormick added while some businesses saw a boost, restaurants did not. According to the Moneris data, restaurants saw a six per cent drop in transaction count, while fast food businesses saw a decline of one per cent.<\/p>\n

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The transaction sizes for restaurants and fast food establishments, or total bill, fell by five and eight per cent respectively, given the removal of GST or HST on most items sold by the businesses.<\/p>\n

Moneris expects to collect more data once the holiday concludes to get more insight into the effectiveness of the tax break.<\/p>\n

McCormick said interpreting the success of the program will depend on how success is measured.<\/p>\n

\u201cIf the success criteria (by the government) was to drive more business to Canadian businesses, small businesses, medium-sized businesses, if that was the objective it appears that that probably didn\u2019t happen,\u201d he said.<\/p>\n

\u201cIf the objective was to offer a\u2026 discount to Canadians in some hand-picked categories, then maybe, maybe a success.\u201d<\/p>\n

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