One of Canada’s major payment processors is saying the federal government’s GST holiday did little to boost consumer spending.
The federal government put in place a break on the GST / HST on certain items from Dec. 14, 2024 to Feb. 15, 2025 in an attempt to offer some relief for cash-strapped Canadians. The sales tax break applied to a limited set of items, including certain food, beverages, restaurants, children’s items, books, video games and Christmas trees.
According to Moneris, Saskatchewan was the only province to see an increase in total spending during the first month of the tax break. Sask. consumer spending was two per cent higher than the previous year during that period.
The transaction count in Saskatchewan was down two per cent, but the province saw a four per cent increase in transaction size.
Across Canada, spending was down four per cent year-over-year, Moneris says.
“While the tax break aimed to spur spending, Moneris’ data shows it may have unintentionally slowed it down. With a (-3%) decline in overall transaction sizes year-over-year, the data suggests that the break may not have had its anticipated effect” said Sean McCormic, director of business development for data services at Moneris.
Nationally, there was some modest growth when it came to children’s clothing stores, with transaction counts rising by eight per cent, while transaction size remained unchanged.
Family clothing stores saw two per cent growth in the size of transactions, while transaction count was down four per cent.
Restaurants saw a six per cent drop in the number of transactions, while fast food places were down one per cent, and the average transaction size at restaurants and fast food establishments dropped five and eight per cent.
“The drop in transaction volume and count indicates that the tax break’s modest savings didn’t seem to appeal to consumers. Its short two-month window likely further curbed the opportunity for consumers to plan and make meaningful purchases,” McCormick said.
