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GST holiday could lead to decline in sales when finished says marketing professor

Shopping center (CTV News)
Shopping center (CTV News)

The GST/HST tax break is in effect and set to run until Feb. 15, 2025.

The tax break applies to:

  • prepared foods, including vegetable trays, pre-made meals and salads and sandwiches
  • restaurant meals, whether dine-in, takeout or delivery
  • some snacks, including chips, candy and granola bars
  • beer, wine and cider, as well as pre-mixed alcoholic beverages below seven per cent alcohol by volume (ABV)
  • children’s clothing and footwear, car seats and diapers
  • some children’s toys, such as board games, dolls, puzzles and video game consoles.
  • some books and newspapers
  • Christmas trees

The federal government says it brought in the tax pause to help ease affordability concerns during the holiday season.

However, a marketing professor with the Odette School of Business at the University of Windsor, says this could ultimately have a negative impact on the businesses themselves when all is said and done. 

Peter Voyer says typically consumers have the tendency to take advantage and stockpile goods during sales.

"I would forecast that sales would decline until such time as personal inventories have been expended and then consumers spending and purchases would get back to baseline levels."

He says the tax break may not have had been implemented with businesses in mind.

"When we look at sales promos, that I sort of look at from a marketing perspective, that are ultimately designed to enhance sales, here we see the goal is more, I would suggest, for political reasons, as opposed to business or marketing reasons."

Voyer says consumers may get too accustomed to the temporary savings.

"It is going to sting most consumers when the prices that they've enjoyed over the two or three month period revert back to a higher level. So they're going to be paying more, essentially, and that is going to sting and that would cause me concern."

A recent online survey of small businesses by the Canadian Federation of Independent Business (CFIB) found that only four per cent of respondents expect stronger sales because of the tax break. 

-With files from CTV News

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