Experts urge Canadians to budget carefully as GST holiday discounts start on December 14
Financial experts urge Canadians to approach the federal government’s upcoming GST holiday cautiously, reported by BNN Bloomberg.
While the initiative offers savings, particularly for low- and middle-income families, its overall impact depends on individual spending habits and priorities.
Jessica Morgan, founder of financial literacy platform Canadian Budget, noted that “getting any amount of discount is always a benefit.”
However, she highlighted the importance of aligning purchases with personal budgets to avoid overspending or incurring additional debt.
“It really depends on what the purchase is for and when,” she said, adding that using credit for purchases could result in accumulating interest, potentially negating the savings.
The GST holiday, set to run from December 14 to mid-February, provides a five percent discount on select items, including children’s clothing, books, toys, food, and some alcohol.
Additionally, the federal government plans to distribute $250 cheques to Canadians earning up to $150,000 annually. Ontario has also announced a similar tax break for certain items, potentially increasing the total discount for Ontario residents to as much as 15 percent.
Morgan identified families with young children as likely to benefit the most, recommending they focus on essentials like diapers.
For example, a $2 saving on a box of diapers priced at $35-$40 may seem small but can accumulate over time.
“Over the period of Dec. 14 to Feb. 15, it can add up,” she said. For bigger-ticket items, she suggested waiting for Boxing Day sales to combine store discounts with the GST savings.
However, Morgan cautioned that shoppers might find better deals through current sales than by waiting for the GST holiday.
For instance, a 30 percent retailer discount on a gaming console or a large artificial Christmas tree, both eligible for the GST break, could provide more savings than the tax discount alone.
Bruce Sellery, CEO of Credit Canada, voiced concerns that the GST holiday might pressure consumers into unnecessary spending. “The best way to save money is not to search for the best deal,” he stated. “The best way to save money is to not buy the thing. That is a savings of 100 percent.”
Sellery emphasised that the tax break offers modest savings. For example, a family spending $500 on children’s clothing would save only $25 with the five percent discount.
He also pointed out that many low- and middle-income Canadians cannot afford to pay for large purchases upfront, resulting in credit use that increases their debt load.
Even with the discount, they are “basically renting that money,” he said.
Both Morgan and Sellery highlighted the importance of carefully evaluating purchases during the GST holiday, emphasising the need for consumers to prioritise their financial health over short-term savings.
