With the GST break ending soon, it’s time to revisit whether the federal government fulfilled its goal of easing financial stress on Canadians and encouraging spending.
In November, Prime Minister Justin Trudeau announced the two-month GST cut on groceries and other items as we headed into the busy and costly gift-giving season.
The tax break began on December 14, 2024, and will end this week on February 15.
Some of the highlights from the list of products include groceries, beer and wine, restaurant meals (dine-in, takeout, or delivery), essential childcare items and even Christmas trees.
The government estimated the policy would provide $1.6 billion in federal tax relief. It came as people grappled with unaffordable housing and high food costs.
So, did the GST break actually benefit Canadians?
Reports have been released analyzing exactly how the cut has impacted overall spending and traffic at businesses.
According to commerce provider Moneris, spending did not significantly increase year over year during the first month of the GST holiday.
Compared to data from December 14, 2023 to January 15, 2024, the same period in 2024 to 2025 saw a decline in overall transactions.
“While the tax break aimed to spur spending, Moneris’s data shows it may have unintentionally slowed it down. With a (-3 per cent) decline in overall transaction sizes year-over-year, the data suggests that the break may not have had its anticipated effect,” said Sean McCormick, director of business development and data services.
Nationally, Moneris found a 4 per cent decline in total spending. It also broke down spending based on provinces.
Most provinces saw a decline in spending, with Ontario seeing the biggest drop of 8 per cent. Saskatchewan was the only province that saw an increase in spending and transaction size.
“The drop in transaction volume and count indicates that the tax break’s modest savings didn’t seem to appeal to consumers,” explained McCormick. “”ts short two-month window likely further curbed the opportunity for consumers to plan and make meaningful purchases.”
He notes that the mixed results possibly show how important timing is.
“With the tax break coinciding with the latter half of the holiday shopping season, many consumers may have already made their purchases, leaving limited opportunity for a significant impact on spending,” McCormick said.
Moneris also broke down the year-over-year transactions in different sectors, including children’s apparel, clothing stores, toy and game stores, restaurants and fast food.
Children’s apparel saw an increase in transactions by 8 per cent, while restaurants and fast-food establishments saw a 6 per cent and 1 per cent decline, respectively.
“Our data shows a decline in both transaction count and average spend, likely reflecting post-holiday budget tightening,” said McCormick. “This is a good reminder that consumer behaviour varies widely by category, and tax exemptions may not deliver a universal lift.”
Canadian restaurants want permanent GST break
Recent data from Restaurants Canada, an association that represents restaurants across the country, tells a different story.
A report using data from the online restaurant reservation service OpenTable found an 18 per cent increase in dining from December 14 to 27, 2024, compared to the corresponding period in 2023.
Ontario saw a 23 per cent increase year-over-year, while Atlantic provinces saw an increase of 8 per cent.
Restaurants Canada says this aligns with new data from its REACT Survey, which found a seven-point increase between December 2024 (92.1) and December 2023 (85.1) to its Consumer Dining Index.
The Consumer Dining Index is the average number of times Canadians bought a meal or snack from a restaurant in the past month, indexed to July 2023. The December 2024 index also captures the two weeks before the tax holiday.
“Seeing Canadians embrace the tax relief and treat themselves to a meal out is really encouraging, especially as we navigate a climate of economic uncertainty,” said Kelly Higginson, president and CEO at Restaurants Canada, in a statement. “More sales also mean more hours for our nearly 1.2 million workers, so this is a win-win-win.”
The association says this comes as restaurants struggle with rising operating costs and lower consumer demand. It adds that 53 per cent of restaurants are operating at a loss or barely breaking even.
“We’re very pleased to see these early signs of recovering consumer demand for our sector. This shows that removing sales tax on food is a measure that supports Canadians, businesses and workers” said Higginson. “We urge the federal government to make the GST and HST tax break on prepared food permanent.”
