A new analysis looks at how spending patterns compare to previous year
Giving a two-month break from sales taxes on many popular items, launched in the lead-up to the holidays – was hailed as a big deal for Canadian consumers by the federal government.
But did the break in GST/HST, that will end the day after Valentine’s Day at the end of next week, have a real impact on spending behaviours?
According to payments processor Moneris, the tax break did not produce a significant year-over-year increase in consumer spending in the first month of the tax pause – December 14, 2024, to January 15, 2025, compared to the same period of the previous year – in fact, there was a slight decrease.
“With a (-3%) decline in overall transaction sizes year-over-year, the data suggests that the break may not have had its anticipated effect,” said Sean McCormick, Moneris director of business development. “The drop in transaction volume and count indicates that the tax break’s modest savings didn’t seem to appeal to consumers. Its short two-month window likely further curbed the opportunity for consumers to plan and make meaningful purchases.”
While a broad gain in spending may have been missed, there were winners and losers among categories, led by a rise for children’s and infant apparel stores which saw transaction counts rising by 8%, although transaction size remained unchanged. But restaurants saw a 6% drop in transaction count and a 5% decrease in transaction size.
“The widespread decline in average transaction sizes suggests that provincial tax-matching policies may not align with what truly drives consumer spending,” added McCormick. “Similar spending patterns across regions, regardless of tax matching, indicate that broader economic factors were likely at play.”
While the year-over-year comparison shows that the tax break may not have boosted spending in its first month, a recent thought-leadership piece from RBC economist Carrie Freestone suggested that consumers may have delayed their November spending until the GST/HST pause came into effect.
