OTTAWA – The Liberal government is planning to give Canadians a tax break over the holidays and hand out billions of dollars in a move that two opposition leaders characterized as a trick to buy votes from frustrated people struggling with the high cost of living.
Prime Minister Justin Trudeau made the announcement on Thursday, proposing to cut the federal goods and services tax on a slew of items over a two-month period.
“Our government can’t set prices at the checkout, but we can put more money in people’s pockets,” Trudeau said at a press conference in Toronto alongside Finance Minister Chrystia Freeland.
“The working Canadians rebate of $250 which will be sent to people in April, is going to give people that relief they need, and the tax break over the next two months is going to help on the costs of everything as we approach the holidays, as we get into the new year.”
The proposed GST break would begin Dec. 14 and end Feb. 15. The Liberals say it will apply to a number of items including children’s clothing and shoes, toys, diapers, restaurant meals and beer and wine.
It also applies to Christmas trees — both natural and artificial — along with a variety of snack foods and beverages, and video game consoles.
Canadians who worked in 2023 and earned less than $150,000 would also receive a $250 cheque in the spring.
That means the money would go to about 18.7 million people, costing the government about $4.7 billion. The GST break is expected to cost another $1.6 billion.
The measures come as an inflation-driven affordability crunch has left voters unhappy with the Trudeau government. A federal election is slated to take place before next October, but could come sooner if the minority government falls before then.
The Conservatives have maintained a double-digit lead over the Liberals in public opinion polls for months, as Leader Pierre Poilievre promises to slash taxes and government spending to restore affordability.
High inflation has also put pressure on the Liberals to avoid introducing measures that would stimulate spending and fuel price growth.
However, the prime minister dismissed the idea that this move could raise inflation again, noting that price growth and interest rates are down.
“It allows us to make sure that we are putting money in people’s pockets in a way that is not going to stimulate inflation, but is going to help them make ends meet and continue our economic growth,” Trudeau said.
Poilievre blasted the NDP and Liberals alike over the announcement, saying his party had a better idea: ending the carbon price permanently.
“Today what we have is a two-month temporary tax trick that will not make up for the permanent quadrupling of the carbon tax on heat, housing, food and fuel,” Poilievre said.
He was referring to the Liberal plan to continue increasing the carbon price annually until 2030.
The Conservatives have pledged to scrap the federal fuel charge, which is applied on the purchases of 21 different fuels. Proceeds from the federal consumer carbon price are returned to Canadians and small businesses through rebates.
Bloc Québécois Leader Yves-François Blanchet said he’s happy people will have more money in their pockets over the holidays, but criticized the Liberals for what he called an incoherent policy.
He pointed out that when his party proposed increasing old age security for seniors under 75 — something that would cost an estimated $16 billion over five years — the Liberals said they wouldn’t support the measure because it wasn’t means tested to help the most vulnerable.
“The Liberals have shown that when they need billions of dollars in order to literally buy votes, they find it,” Blanchet said.
Ontario Finance Minister Peter Bethlenfalvy accused the federal government of taking the idea from his playbook. Last month, the province announced it would send $200 cheques to all Ontario taxpayers and their children as part of its own suite of measures designed to ease the effects of the affordability crisis.
“We came up with the $200 rebate, but you know what the federal government can do is scrap the carbon tax,” he said. “I mean, that is taking money out of people’s pockets.”
In order to get the measures passed through Parliament, the Liberals will need the support of an opposition party.
The New Democrats say they are poised to be a willing partner, taking credit for forcing the minority government to adopt their idea — although NDP Leader Jagmeet Singh insisted Thursday there was no negotiation between the parties.
Last week, the NDP promised if it wins the next election it would bring in a permanent GST break on essential items including diapers, prepared meals, cellphone and internet bills.
“This is not the way that we would have approached it,” Singh said, adding that even though the proposal does not go far enough for him, “obviously we’re going to support people getting a break.”
The changes will be part of the annual fall economic statement, which will need to pass through Parliament in order to take effect.
The House of Commons has been embroiled in a stalemate for nearly two months as the Conservatives filibuster a motion demanding the government release unredacted documents related to misspending at a green tech fund.
That means no legislation has been debated or voted on for more than eight weeks, because matters of privilege take precedence over all other House business.
The NDP says it will not end the privilege debate, but instead will use a procedural measure to adjourn that debate for one day at a time to allow the tax measures to pass.
This report by The Canadian Press was first published Nov. 21, 2024.
