GST holiday is Santa for some, Grinch for others

Commentary
By Leila Sarangi
and David Macdonald

Retail politics are coming on strong as Ontarians approach the holiday season: first, Premier Doug Ford’s $200 gift to every resident; second, Prime Minister Justin Trudeau’s “GST holiday” on certain items.

Some of these items are essential, such as children’s clothing and diapers.

But the rest of the list – beer, wine, chips, candies, cake, Christmas trees – are nice to have, not essentials. And that misses the point. Tax breaks and transfers in the name of affordability, which is the new retail politics in Canada, should be targeted to low-income people struggling to get by.

They’re not.

They’re also a drop in the bucket. The GST holiday, for instance, would only amount to a five per cent tax break on those select holiday items. That won’t pay the rent. What’s more, nothing is stopping big stores from jacking up prices or nixing holiday sales. After all, the federal government just took the wind out of GST-free marketing incentives.

That’s part of the folly of retail politics. They drain government coffers and subsidize big businesses.

But wait, there’s more. In the new year, the federal government will also send a $250 cheque to all workers who make under $150,000. Guess what: 95 per cent of working Canadians make under $150,000.

Retail politics might offer broad appeal, but they do nothing to alleviate the struggles of Canada’s poorest. The cheques and GST holiday are not going to help low-income households that are increasingly using food banks and facing homelessness this holiday season.

The Premier and Prime Minister’s announcements come on the heels of the new report card on child and family poverty from the anti-poverty watchdog coalition, Campaign 2000.

The report found record increases in child poverty in Canada for two straight years in a row. By 2022, nearly one in five children, or 1.4 million, were below the poverty line.

That’s an increase of nearly five percentage points over two years – the largest rise in poverty on record in Canada.

The working poor are hurting too. Only three of Canada’s 62 largest urban areas are affordable enough for a minimum-wage worker working full-time to afford to rent a two-bedroom apartment.

In cities like Toronto and Vancouver, working two full-time minimum-wage jobs means you still can’t afford to rent a one-bedroom apartment.

News flash: $250 isn’t going to help.

Instead of throwing $6.3 billion out the window on a one-time holiday gift that will do nothing to reduce poverty, the federal government should target supports to the lowest-income people in Canada.

The Canadian Centre for Policy Alternatives has modelled a supplement to the Canada Child Benefit that targets families in deep poverty and provides them with a maximum of $8,500 per year for a family making $19,000 or less.

That’s a cheaper bill for the federal government than the GST holiday. And low-income families would benefit from $8,500 more a year in support. Canada would immediately cut child poverty rates in half with one single measure.

Talk about getting bang for your buck.

It’s one of Campaign 2000’s priority recommendations to work toward eliminating child poverty.

The most meaningful thing the federal and provincial governments could do to reduce poverty is to target support to the lowest-income households in Canada.

Failing to do that is about as Grinchy as it gets.

Leila Sarangi is the national director of Campaign 2000. David Macdonald is a senior economist with the Canadian Centre for Policy Alternatives.