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Tax Break for All Canadians Act

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Tax Break for All Canadians Act
Parliament of Canada
  • An Act respecting temporary cost of living relief (affordability)
CitationSC 2024, c. 32
Passed byHouse of Commons of Canada
PassedNovember 28, 2024[1]
Passed bySenate of Canada
PassedDecember 12, 2024[1]
Royal assentDecember 12, 2024[1]
CommencedDecember 14, 2024[2]
Date of expiryFebruary 15, 2025[2]
Legislative history
First chamber: House of Commons of Canada
Bill titleBill C-78, 44th Parliament, 1st Session
Introduced byDeputy Prime Minister and Minister of Finance Chrystia Freeland
Committee responsibleFinance
First readingNovember 27, 2024[1]
Second readingNovember 28, 2024[1]
Voting summary
  • 176[4] voted for
  • 151[4] voted against
Considered by the Finance CommitteeNovember 28, 2024[3]
Third readingNovember 28, 2024[1]
Second chamber: Senate of Canada
Bill titleBill C-78
Member(s) in chargeRepresentative of the Government in the Senate Marc Gold
Committee responsibleNational Finance
First readingDecember 3, 2024[1]
Second readingDecember 3, 2024[5]: 7749–7756 
Considered by the National Finance CommitteeDecember 3, 2024 - December 5, 2024[6][7][8][9]
Third readingDecember 10, 2024 - December 12, 2024[1]
Voting summary
Status: Expired

The Tax Break for All Canadians Act (French: Loi concernant un congé fiscal pour l’ensemble des Canadiens) is a statute of the Parliament of Canada. The Liberal government of Prime Minister Justin Trudeau introduced the act in late November 2024 to give a temporary tax holiday on the federal goods and services tax and the federal–provincial harmonized sales tax for food and other commodities over the holiday season. The act came into force on December 14, 2024, and expired on February 15, 2025.

The passage of the act contributed to the resignation of Chrystia Freeland, the deputy prime minister and minister of finance, triggering a political crisis that led to the resignation of Trudeau himself.

Legislative history

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Freeland, in her capacity as minister of finance, introduced the bill as a government measure in the House of Commons on November 27, 2024, during the 44th Canadian Parliament.[11] The House of Commons passed the bill on November 28, 2024,[1] and the Senate passed it on December 12, 2024.[1] It received royal assent on the same day.[1][12]

Effect of the act

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Effective December 14, 2024, the act waived the federal goods and services tax and the combined federal–provincial harmonized sales tax (for provinces that adopted HST) on certain qualifying items in the following categories:[13]

  • Food and beverages
  • Children's clothing and footwear
  • Diapers
  • Child booster seats
  • Christmas trees
  • Print books and Newspapers
  • Toys
  • Games

The tax waiver expired on February 15, 2025.[13]

Purpose

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See also: Economic history of Canada § Recent years

The government stated that the act was passed to alleviate the cost of living crisis in Canada.[14] In Q2 2022, inflation rates in Canada reached a maximum of 8.1%, the highest rate in over 30 years.[15] The Consumer Price Index of Canada increased 4.4% from the end of 2019 to the end of 2023.[16] Nearly half of Canadians in a Statistics Canada survey reported that their ability to cover daily expenses was greatly impaired by the rise in prices of everyday goods.[17]

Cost

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The tax holiday was estimated to cost the federal treasury approximately six billion dollars.[18]

Public reaction

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The act received mixed reactions from the general public. While most shoppers welcomed the tax break,[19] others noted that it would not truly create that much of an overall impact.[20] Some businesses reported increased logistical burdens over determining the eligibility of and adjusting the tax rate for thousands of items on short notice.[21] As the tax holiday was implemented on a voluntary basis, consumer confusion could arise, with some retailers participating in the program and others not.[22] The tax relief may also temporarily increase inflation, disproportionately benefit wealthier individuals with more disposable income, and ultimately increase economic inequality[23]

Political fallout

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On December 16, 2024, the Deputy Prime Minister and Minister of Finance, Chrystia Freeland, resigned from Cabinet in response to Trudeau's financial policies, such as his proposed response to the Trump tariffs and the tax holiday. In her resignation letter, she referred to it as a "costly political gimmick".[24][25][26]

Commentators criticized the fact that Trudeau did not consult with the Cabinet before announcing the measure, referring to it as a breakdown in Cabinet government, akin to presidential government.[18]

Freeland’s resignation sparked a political crisis,[27] ultimately leading to Trudeau's resignation as prime minister in January 2025, effective March 2025.[28]

See also

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References

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  1. ^ a b c d e f g h i j k Legisinfo, Bill C-78, 44th Parliament, 1st session: Tax Break for All Canadians Act.
  2. ^ a b Canada, Department of Finance (2024-12-12). "Legislation to put more money in your pocket receives Royal Assent". www.canada.ca. Retrieved 2024-12-15.
  3. ^ "Debates (Hansard) No. 378 (44-1)" (PDF). Parliamentary Debates (Hansard). Canada: House of Commons of Canada. November 27, 2024. p. 28304.
  4. ^ a b "Vote Detail - 904 - Members of Parliament - House of Commons of Canada". www.ourcommons.ca. Archived from the original on 2024-12-12. Retrieved 2024-12-15.
  5. ^ "Debates of the Senate" (PDF). Parliamentary Debates (Hansard). Vol. 153. Canada: Senate of Canada. December 3, 2024. p. 7742.
  6. ^ Canada, Senate of. "Meetings #134 - Standing Senate Committee on National Finance (44th Parliament, 1st Session)". SenCanada. Retrieved 2024-12-15.
  7. ^ Canada, Senate of. "Meetings #135 - Standing Senate Committee on National Finance (44th Parliament, 1st Session)". SenCanada. Retrieved 2024-12-15.
  8. ^ Canada, Senate of. "Meetings #136 - Standing Senate Committee on National Finance (44th Parliament, 1st Session)". SenCanada. Retrieved 2024-12-15.; [https://sencanada.ca/en/committees/NFFN/Report/140065/44-1
  9. ^ Senate committee report.
  10. ^ a b c Canada, Senate of. "Vote Details: Tax Break for All Canadians Act – C-78 – Third Reading". SenCanada. Retrieved 2024-12-15.
  11. ^ "Debates (Hansard) No. 377 (44-1)" (PDF). Parliamentary Debates (Hansard). Canada: House of Commons of Canada. November 27, 2024. pp. 4775–4778.
  12. ^ Tax Break for All Canadians Act, SC 2024, c. 32.
  13. ^ a b Agency, Canada Revenue (2024-11-28). "GST/HST break". www.canada.ca. Retrieved 2024-12-15.
  14. ^ Canada, Department of Finance (2024-12-09). "Remarks by the Deputy Prime Minister regarding Bill C-78, the Tax Break for All Canadians Act". www.canada.ca. Retrieved 2024-12-19.
  15. ^ Kostyshyna, Olena; Ouellet, Maude (2024-09-05). "Household Food Inflation in Canada". www.bankofcanada.ca. doi:10.34989/swp-2024-33. Retrieved 2024-12-19.
  16. ^ "Canada CPI: 12-month percent change 2023". Statista. Retrieved 2024-12-20.
  17. ^ Government of Canada, Statistics Canada (2024-08-15). "The Daily — Nearly half of Canadians report that rising prices are greatly impacting their ability to meet day-to-day expenses". www150.statcan.gc.ca. Retrieved 2024-12-19.
  18. ^ a b Kathryn May, "Christyia Freeland's resignation points to final breakdown in Cabinet government", Policy Options, December 20, 2024.
  19. ^ Ramsay, Janis (2024-11-25). "'Keep shopping': Ontario retailers react to GST/HST tax rebate relief coming Dec. 14 in Canada". InsideHalton.com. Retrieved 2024-12-19.
  20. ^ "'Not that much of a deal': Shoppers, businesses lukewarm on GST holiday". Canadian Broadcasting Corporation. 2024-12-14. Retrieved 2024-12-19.
  21. ^ "GST break begins with business owners frustrated at the last-minute measure". The Globe and Mail. 2024-12-14. Retrieved 2024-12-19.
  22. ^ Arsenych, Alex (2024-12-14). "Holiday tax break is a 'pain in the butt' for some Ontario retailers". CP24. Retrieved 2024-12-19.
  23. ^ Islam, Shahidul; Ghosh, Subhadip (2024-12-10). "Canada's holiday tax break will have winners and losers — here's what you need to know". The Conversation. Retrieved 2024-12-19.
  24. ^ Robert Fife and Marieke Walsh, "Trudeau’s office at odds with Finance Minister Freeland over GST holiday, $250 cheques, sources say", Globe & Mail, December 10, 2024; updated December 11, 2024 [subscription needed].
  25. ^ "Read Chrystia Freeland's letter of resignation from Trudeau's cabinet", CBC News, December 16, 2024.
  26. ^ Nadine Yousif, "Canada's finance minister quits over Trump tariff dispute with Trudeau", BBC News, December 16, 2024.
  27. ^ John Paul Tasker, "Trudeau faces frustrated MPs after Chrystia Freeland's shock resignation – Freeland's abrupt departure prompts a political crisis for Trudeau", CBC News, December 16, 2024; updated December 17, 2024.
  28. ^ "Your questions on Trudeau's resignation, answered — Announcement comes at critical junction for Canada both at home and abroad", CBC News, January 6, 2025; updated: January 8, 2025.
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