CFIB: GST HOLIDAY A FLOP FOR SMALL BUSINESS

DAN KELLY

OTTAWA – As the two-month GST/HST holiday comes to an end, only 5% of small businesses saw stronger sales compared to the same period last year, finds new data by the Canadian Federation of Independent Business (CFIB). Among those, only 4% of businesses in retail and 15% hospitality saw an increase in their sales.

“By all accounts the government’s GST holiday was a flop for small businesses,” said Dan Kelly, CFIB president. “For many retailers it was an administrative nightmare to get point-of-sale machines compliant just before Christmas, let alone sort out which LEGO sets the holiday applied to, or how many items in a gift basket had to be tax-free for it to qualify.”

Most (66%) small firms impacted by the tax break said their sales stayed about the same but also faced a number of challenges including reprogramming point-of-sale systems and the associated costs, additional administrative workload, training staff and managing customer inquiries.

On top of the administrative headache and confusing sets of rules, both the Canada Revenue Agency (CRA) and Finance Canada were providing conflicting information as to whether participation in the GST/HST holiday was mandatory. In fact, just last month, the GST holiday was nominated for CFIB’s Paperweight Award – one of the worst examples of red tape across the country – as part of its 16th annual Red Tape Awareness Week.

“The past few months have been incredibly challenging and filled with uncertainty for many small firms. As they transition their systems back to the original amount of GST, we urge the CRA to be lenient and waive taxes owed, penalties, and interest for good faith errors made during the rushed implementation period. The government should also provide affected businesses with a $1,000 credit in their GST/HST accounts to offset programming and administrative costs they incurred back in December,” Kelly said. 

Dan Kelly is President of the CFIB