NEWS RELEASE - Temporary elimination of the GST - A well-intentioned but risky measure for local businesses 

FOR IMMEDIATE RELEASE

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Temporary elimination of the GST - A well-intentioned but risky measure for local businesses 

Gaspé, November 27, 2024 - The Côte-de-Gaspé Chamber of Commerce has taken note of the recent announcement by the Department of Finance Canada to temporarily eliminate the Goods and Services Tax (GST) on food and essential products for two months, starting December 14, 2024. It was able to survey its members to gauge the impact on targeted businesses.

This measure is aimed at easing the financial burden on Canadians in the run-up to the holiday season, when spending is particularly high. While the intent of this initiative is laudable, it nevertheless raises significant concerns for businesses in La Côte-de-Gaspé. The elimination of the GST, while seemingly beneficial to consumers, imposes a considerable logistical burden on retailers, who will have to modify their cash register systems, adjust their communications and explain to their customers the subtleties of this temporary exemption. 

List of targeted properties

• Restaurant meals
• Beers, wines and ciders with less than 7% alcohol sold in grocery stores
• Snacks (chips, candy and candy bars)
• Desserts, including cakes, pastries, tarts, cookies, doughnuts and croissants
• Soft drinks, fruit juice drinks
• Bottled water
• The books
• Printed newspapers, magazines and calendars
• Natural and artificial Christmas trees
• Certain children's toys, including video game consoles, puzzles, dolls, construction sets and board games
• Children's clothing and shoes
• Car seats for children
• Diapers
• Prepared foods, such as vegetable trays, salads and sandwiches.

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This hasty deployment could create confusion and result in lost revenue for some businesses. " We believe that any gesture to ease the burden on citizens' wallets is commendable, but it is essential to provide support for merchants, particularly during this busy period, who are already affected by the labour shortage and the Canada Post strike," said Marie-Claude Brière, General Manager of the Côte-de-Gaspé Chamber of Commerce.

We therefore urge the authorities to provide clear and immediate support to businesses, notably by simplifying tax procedures and offering accessible resources to ease the transition. Without adequate support, this good intention could turn into an additional burden for those who, day after day, support the local economy. 

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Below are the main impacts listed by members who responded to the survey - express from members of the Côte-de-Gaspé Chamber of Commerce, 

Changes to cash register and inventory systems
Companies will have to remove the GST from certain products (such as alcohol, restaurant meals, etc.) and then put it back starting February 15. This involves modifying the tax codes on many products in the point-of-sale (POS) system, and may take several hours.

It's a heavy and time-consuming administrative task, especially during busy periods. Managing this task during the holiday season, along with inventory and sales management, could disrupt operations and lead to errors if not properly monitored.

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Complex management of products with different GST rates
Certain products, such as beers under 7%, complicate the application of the GST vacation even further. A specific adjustment will have to be made for each product concerned in the case of microbrewery beers up to 9%, which can lead to errors or oversights.

The error here could lead to the tax being applied incorrectly, with tax consequences for the company. Having to adjust in real time during a busy period can also create additional stress.

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Changes to accounting systems
In addition to the cash register system, the accounting system will also have to be modified to reflect the temporary absence of GST and the return of the tax from February. This may include adjustments to financial reporting and management of accounting entries.

Although less immediate than cash register adjustments, changes to accounting systems are crucial to avoid errors in recording income and expenditure, which could lead to difficulties in future audits or tax returns.

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Complexity and cost of technical support
Companies using complex POS systems like Maître D will probably need to call in a support service to make the necessary modifications. This can involve high costs ($150/hr), and the service may be limited due to high demand from other companies in the same situation.

Although this represents a significant additional cost, it is not a systematic task. However, if support is expensive and difficult to access, it can create delays in updating systems, which can disrupt sales and tax management during the vacation period.

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Holiday shutdown period and limited impact of the measure
Some businesses, such as those that close for the holidays, will only be affected for a short period. However, even with a limited impact, the need to make costly and complicated changes for such a short period may seem disproportionate.

The Chamber remains vigilant and is ready to work with government authorities to ensure that this measure truly benefits both consumers and merchants in La Côte-de-Gaspé.

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About the La Côte-de-Gaspé Chamber of Commerce

The Côte-de-Gaspé Chamber of Commerce is a non-profit organization (NPO) made up of a voluntary group of over 200 businesses and organizations in the Côte-de-Gaspé region (Murdochville, Grande-Vallée, Petite-Vallée, Cloridorme and Gaspé). It is a strong advocate of its members' interests with regard to public policy, and promotes business development in its community by contributing to the creation of an innovative and collaborative business environment. Its mission is to represent its members and to bring together, support and serve its members and partners through actions adapted to the socio-economic reality of its territory.

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For further information, please contact 

La Côte-de-Gaspé Chamber of Commerce
Marie-Claude Brière, General Manager
direction@commercecotedegaspe.org

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