The Liberal government plans to temporarily lift the federal sales tax off a slew of items just in time for Christmas and send cheques to millions of Canadians this spring, Prime Minister Justin Trudeau announced on Thursday.
"Our government can't set prices at the checkout, but we can put more money in people's pockets," Trudeau said at a press conference in Toronto alongside Finance Minister Chrystia Freeland.
"The working Canadians rebate, $250 which will be sent to people in April, is going to give people that relief they need, and the tax break over the next two months is going to help with the cost of everything as we approach the holidays, as we get into the new year."
The GST break would begin Dec. 14 and end Feb. 15. The Liberals say it will apply to a number of items including children's clothing and shoes, toys, diapers, restaurant meals and beer and wine.
It also applies to Christmas trees, a variety of snack foods and beverages, and video game consoles.
And while you’re here, you should know this: if you worked last year and made up to $150,000, you’ll get a $250 cheque in your mailbox in April: the Working Canadians Rebate.
— Justin Trudeau (@JustinTrudeau) November 21, 2024
In 2023 and earned up to $150,000 would also receive a $250 cheque in the spring.
About 18.7 million people will receive the cheques, costing the government about $4.7 billion, while the GST break is expected to cost another $1.6 billion.
The measures come as an inflation-driven affordability crunch has left voters unhappy with the Trudeau government.
High inflation has also put pressure on the Liberals to avoid introducing measures that would stimulate spending and fuel price growth.
However, the prime minister dismissed the idea that this move could raise inflation again, noting that price growth and interest rates are down.
"It allows us to make sure that we are putting money in people's pockets in a way that is not going to stimulate inflation, but is going to help them make ends meet and continue our economic growth," Trudeau said.
In order to get the measures passed through Parliament, the Liberals will need the support of an opposition party. The NDP appears poised to be a willing partner, taking credit for forcing the minority government to adopt its idea.
Last week, the NDP promised it would issue a permanent GST break for essential items if it wins the next election, and late Wednesday Jagmeet Singh said in a statement that his party won a "tax holiday" for Canadians.
"The Prime Minister’s Office just informed us that he’s caving to our Tax-Free-Essentials campaign — partly," Singh said in the statement.
Singh wanted to permanently remove the GST from essentials including diapers, prepared meals, cellphone and internet bills. That was expected to cost $5 billion, but he was also urging provincial governments to match the plan with cuts to provincial sales taxes.
The changes proposed by the Liberals will be part of the annual fall economic statement, which will need to pass through Parliament in order to take effect.
The House of Commons has been embroiled in a stalemate for nearly two months as the Conservatives filibuster a motion demanding the government release unredacted documents related to misspending at a green tech fund.
That means no legislation has been debated or voted on for more than eight weeks, because matters of privilege take precedence over all other House business.
The NDP says it will not end the privilege debate. Instead, a spokesperson for the party says it will use a procedural measure to adjourn that debate for one day at a time to allow the tax measures to pass.
