Trudeau to cut sales tax amid rising costs; alcohol, Christmas trees get cheaper

Canada's Justin Trudeau-led government has announced a series of measures to alleviate rising costs, including slashing of sales tax on a number of items including groceries, children's clothes, alcohol and Christmas trees, as well as sending cheques to 18.7 million people who earned 150,000 Canadian dollars or less in 2023.

The measures announced on Thursday come as Canadians are struggling with rising inflation and the cost of living crisis, leaving citizens increasingly unhappy with Trudeau, who faces a looming general election that will decide his future as Prime Minister.

In separate posts on X, the Prime Minister said, "Canadians are getting a tax break. Starting December 14, we’re pausing GST and HST for two months to make groceries, kids clothes, and other essentials tax-free."

HST, or harmonised sales tax, is a combination of federal and provincial taxes on goods and services in five Canadian provinces.

He also confirmed that his Liberal government will send 18.7 million people one-time cheques worth 250 Canadian dollars, under the "Working Canadians Rebate" scheme, which, according to Trudeau, will arrive in April 2025.

According to a government statement, the federal goods and services tax break would begin on December 14 and end February 15, 2025.

The tax break will apply to several items, including prepared foods, restaurant meals, snacks, alcohol, children’s clothing, diapers, toys, books, newspapers, and Christmas trees, among others.

Addressing a press conference in Toronto, Trudeau said, "For two months, Canadians are going to get a real break on everything they do."

"Our government can't set prices at the checkout, but we can put more money in peoples' pockets. That's going to give people the relief they need. People are squeezed, and we're there to help," he added.

Meanwhile, opposition Conservative leader Pierre Poilievre slammed Trudeau's plan and called the measures a “two month temporary tax trick” that won’t make up for carbon taxes that are set to increase early next year.

He said that housing costs have doubled, food bank use has skyrocketed, and the federal carbon tax is making it more expensive for people to heat their homes under Trudeau's leadership.

"That's the misery you get with massive socialist money-printing and what I'm proposing is a common sense alternative," says Poilievre, who plans to scrap the carbon tax and GST on new home sales if he takes office next year.

The latest economic measures come as the government grapples with persistent unpopularity in the polls and after two defeats in recent by-elections.

The Liberals trail the opposition Conservatives 39 per cent to 26 per cent in the latest Nanos poll, reports The Associated Press.

Meanwhile, CBC's Poll Tracker suggests the Liberals are about 17 percentage points back from the first-place Conservatives. The gap has narrowed somewhat in recent weeks.

Canada's federal debt has doubled over the last nine years to $1.4 trillion. The cost to service that debt is projected to be $54.1 billion in 2024-25.