Retailers not sold on holiday tax break

Canada's two-month tax holiday starts on Saturday.

The federal government is slashing the five per cent HST for two months on a variety of goods. In Ontario, it means a break on the entire 13 per cent HST. 

While it’s good for shoppers, businesses are feeling mixed.

At Hobby and Toy Central in Kitchener, preparing for the tax break has been a “costly nightmare.”

“I have 65,000 different items and some are going to be tax free, and some aren't. And everybody is expecting that majority is going to be tax free,” store owner Cheryl Flood said. “[I] probably spent over $5,000 just in payroll trying to accommodate, to figure out what is tax free and not tax free.”

Ottawa estimates shoppers will save around $260 on a $2,000 basket of qualifying goods over the two-month period. Those goods include children's clothing, footwear, car seats, diapers, some children's toys and books, video-game consoles, controllers or physical game media. Dress up clothes, however, will be taxable.

It’s not so cut and dry at Hobby and Toy Central. They carry products for all ages and say things like a colouring book without age limits listed will be taxed.

“If it doesn't have age, it's taxable. If it says eight plus there, it's tax free. But if it says from 15 or 16 plus, it's taxable. But if there's no age on it, it's all taxable,” Flood explained.

Flood expects some shoppers will try and return previously purchased items in order to buy them again without the tax. She said she’s preparing for disputes.

“If they feel that it is tax free, they are going to have to try and go to the government and get back the taxes themselves," Flood said. “The definitions of trying to make this work is going to be extremely challenging. Everybody is just going to have to smile and go with it.”

She feels the tax break should've gone directly to low-income families.

For other businesses, like restaurants, the tax break is seen as a positive.

“We believe that it's going to allow our guests to celebrate more with friends and family,” John Mackay, the president of Beertown, said.

The HST break also applies to prepared foods, restaurant meals, some snacks and alcohol beverages like beer, wine, cider and coolers. But anything with hard liquor will be taxed.

“As soon as it was announced, we were on the phone with our point-of-sale partner, Silverware, who's been amazing. They've made it so easy, to be honest,” Mackay said. “So many of our suppliers have looked at this as an opportunity and made it very easy on restaurants.”