TORONTO – The federal government’s “meaty” move to pause federal sales tax on a long list of items and send cheques to millions of Canadians this spring could factor into an improving outlook for growth in 2025, one economist says.
Bank of Montreal chief economist Doug Porter says the moves, which will cost about $6.3 billion, could put some upward pressure on inflation.
But he notes that the measures come at a time when inflation has cooled and policy makers are looking to boost the economy rather than tamp down price growth.
BMO Economics believes the tax cut will drive additional spending, so it’s raising its growth forecast for the first quarter to 2.5 per cent from 1.7 per cent.
The GST break, which would begin Dec. 14 and end Feb. 15, applies to a number of items including toys, diapers, snack food, restaurant meals and beer and wine.
Canadians who worked in 2023 and earned up to $150,000 would also receive a $250 cheque in the spring.
This report by The Canadian Press was first published Nov. 21, 2024.
