GST holiday break: Is it good for the Canadian economy?

“It is important to point out how serious this thing is. It’s a big move and it’s important to note that the biggest impact here won’t be on the high-end GST holiday. There are too many checks (rebate checks),” he said.

Ontario rebates + GST ​​holiday: tax savings or inflation booster?

When combined with provincial government rebates promised in Ontario, Porter said the money is likely to provide a big boost to consumer incomes and spending early in the new year. But he noted that the moves come at a time when inflation has cooled and policymakers are looking to boost the economy rather than curb inflation.

“This now works the same way as the Bank of Canada has started to transition to,” he said. Porter said he still expects the central bank to continue lowering rates. “They may take a precautionary measure,” he said.

The Bank of Canada (BoC) cut its key interest rate by half a percentage point to 3.75% in October, moving at a larger-than-normal rate as inflation stabilized. The government’s spending habits make it more likely that the central bank will stick with a quarter-point cut in its next rate announcement in December, economists said on Thursday.

Royce Mendes, managing director and head of macro strategy at Desjardins, said the sales tax exemption will reduce monetary strength, but the Bank of Canada will look beyond that. “Central bankers will be very interested in the implications for growth and underlying price pressures,” he said in a note to analysts.

Mendes said a 25-basis point cut in December is possible, with a quarter-point cut the norm in 2025, as the Bank of Canada cautiously continues its rate-cutting cycle. (The basis point is one hundredth of a percentage point.) “The announcement should close the door to a 50 basis point cut next month,” he added.

Who gets the Active Canadian Discount?

Canadians who work in 2023 and earn up to $150,000 will also receive a $250 check in the spring. About 18.7 million people will receive checks.

What items will be exempt from GST?

The GST break, which will begin on Dec. 14 and ends on Feb. 15, applies to several items including toys, diapers, snacks, restaurant food, and beer and wine.