GST holiday break: Is it good for Canada’s economy?

“It’s important to point out how meaty this is. It’s a pretty significant move and it’s important to note that the much bigger impact here won’t be on the high-profile GST holiday. It’s much more about the (rebate checks),” he said.

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

Combined with provincial government rebates promised in Ontario, the cash should result in a big increase in incomes and consumer spending as the brand new 12 months begins, Porter said. However, he noted that the measures come at a time when inflation has cooled and policymakers are aiming to stimulate the economy reasonably than curb price growth.

“This is now actually working in the same direction that the Bank of Canada has started to move in,” he said. Porter said he continued to expect the central bank to chop rates of interest further. “They could take a slightly more cautious stance,” he said.

The Bank of Canada (BoC) cut its key rate of interest by half a percentage point to three.75% in October, an above-average move as inflation has stabilized. The government spending measures make it more likely that the central bank will keep on with a quarter-point cut at its next rate of interest announcement in December, economists said Thursday.

Royce Mendes, managing director and head of macro strategy at Desjardins, said sales tax exemptions would mechanically reduce inflation, however the Bank of Canada would look beyond that. “Central bankers will be more interested in the impact on growth and underlying price pressures,” he said in his note to analysts.

Mendes said a 25 basis point rate cut in December is probably going, with quarter-point cuts the norm in 2025 because the Bank of Canada rigorously continues its rate-cutting cycle. (A basis point is one hundredth of a percentage point.) “The announcement should all but close the door on a 50 basis point cut next month,” he added.

Who gets the working Canadian discount?

Canadians working in 2023 and earning as much as $150,000 would also receive a $250 check within the spring. About 18.7 million people will receive the checks.

Which items are exempt from GST?

The GST break, which might begin on December 14 and end on February 15, applies to a spread of things including toys, diapers, snacks, restaurant meals and beer and wine.