Canada’s federal government has proposed a temporary tax break that would remove the Goods and Services Tax (GST) and Harmonized Sales Tax (HST) from some consumer items including those for kids. 

If approved by parliament, the two-month tax break will go into effect on December 14 and provide Canadians with an estimated US$1.14 billion (CAD$1.6 billion) in tax relief. The qualifying items include toys, physical video games, consoles, books, apparel, food and Christmas trees. 

In addition to this, Canadian families making less than US$107,000 (CDN$150,000) a year will also receive a US$178 (CDN$250) rebate cheque next spring, aimed at buffering the impact of this year’s holiday spending. Around 18.7 million people will receive the rebate if the legislation is approved. 

This is a substantial move by the Canadian government to restimulate the country’s economy at the start of the New Year now that inflation has cooled down, the Bank of Montreal’s chief economist Doug Porter said in an interview with The Canadian Press yesterday. The plan will cost more than US$4.5 billion (CAD$6.3 billion) to execute, but this investment will help boost consumer spending after Canadians pulled back in 2024 after years of pandemic-era purchases, he added.

Pictured above is the Square One Shopping Centre in Mississauga, Ontario