The Canadian Federation of Independent Business says the two-month GST/HST holiday in Canada, which ends on Saturday, has seen only 5% of small businesses have stronger sales compared to the same period last year.
The CFIB research found only 4% of businesses in retail and 15% in hospitality saw an increase in their sales while 66% of small businesses impacted by the tax break said their sales stayed about the same.
Business challenges included reprogramming point-of-sale systems and the associated costs, additional administrative workload, training staff and managing customer inquiries.
“By all accounts the government’s GST holiday was a flop for small businesses,” Dan Kelly, CFIB president, said in a statement.
“For many retailers, it was an administrative nightmare to get point-of-sale machines compliant just before Christmas, let alone sort out which LEGO sets the holiday applied to, or how many items in a gift basket had to be tax-free for it to qualify.”
On top of the administrative headache and confusing sets of rules, both the Canada Revenue Agency (CRA) and Finance Canada were providing conflicting information as to whether participation in the GST/HST holiday was mandatory, the CFIB said.
In fact, just last month, the GST holiday was nominated for CFIB’s Paperweight Award – one of the worst examples of red tape across the country – as part of its 16th annual Red Tape Awareness Week.
“The past few months have been incredibly challenging and filled with uncertainty for many small firms,” Kelly added.
“As they transition their systems back to the original amount of GST, we urge the CRA to be lenient and waive taxes owed, penalties and interest for good faith errors made during the rushed implementation period.
“The government should also provide affected businesses with a $1,000 credit in their GST/HST accounts to offset programming and administrative costs they incurred back in December,” he said.
The CFIB online survey was conducted Jan. 9-31 with 2,345 respondents with a margin of error of at most +/- 2.02%, 19 times out of 20.