Justin Trudeau’s two-month tax holiday did not stimulate consumer spending, according to a report by Moneris, Canada’s leading payment processor.

The analysis, covering December 14, 2024, to January 15, 2025, revealled overall spending fell 4% year-over-year, with transaction counts also down one percent.

Not only did Canadians spend less, they spent less per transaction—a telltale sign that the holiday failed its intended purpose.

Prime Minister Justin Trudeau announces a proposed two-month GST/HST holiday on essentials starting December 14 and a $250 rebate for working Canadians earning up to $150,000, urging all parties in the House of Commons to pass it swiftly. pic.twitter.com/h1P6RIUMou

— True North (@TrueNorthCentre) November 21, 2024

“While the tax break aimed to spur spending, Moneris’ data shows it may have unintentionally slowed it down,” Sean McCormick, Vice President of Business Development and Data Services at Moneris, told Retail Insider.

Then-finance minister Chrystia Freeland went on to resign from the portfolio, in part to the “costly political gimmick.” Cabinet estimated the cost to taxpayers at $1.6 billion, Blacklock’s learned.

Bill C-78, An Act Respecting Temporary Cost Of Living Relief, suspended GST charges on a wide array of itemized goods, from beer to Bibles through February 15, 2025.

While apparel stores typically saw higher transaction counts for more monies, that did not hold for hobby, toy, and game stores.

Restaurants and fast-food establishments were among the hardest hit, Moneris explained. “The tax holiday brought growth to certain sectors, but for restaurants and fast-food establishments, the story was different.”

Liberal MP Nate Erskine-Smith calls Trudeau's GST 'tax holiday' a "last minute gimmick."

"I'm not even sure it's a great gimmick because most people buy their Christmas trees before Dec. 14," he says, adding he's "not sure if it's great retail politics." pic.twitter.com/OeRbaDifmQ

— Rebel News (@RebelNewsOnline) December 5, 2024

However, current data suggests the timing of the tax holiday likely limited its impact, as many consumers completed the bulk of their shopping before last December 14.

“Our data shows a decline in both transaction count and average spend, likely reflecting post-holiday budget tightening,” McCormick said. 

Additionally, it shows the tax holiday did not align with the core drivers of consumer demand, with the short two-month window curbing more meaningful purchases. 

“Similar spending patterns across regions, regardless of tax matching, indicate that broader economic factors were likely at play,” Moneris explained. Subsequent data will be released when the tax holiday concludes, Retail Insider confirmed. 

More than a third (35%) of Léger respondents said a temporary GST holiday ‘won’t help at all', while 42% feel similarly about the $250 rebate cheques for tax filers.

MORE: https://t.co/q05VPJ0MmX pic.twitter.com/tjT7fQjbd0

— Rebel News (@RebelNewsOnline) December 7, 2024

An Ipsos survey for Global News last December found that two in five (40%) Canadians were either too anxious about holiday spending or have committed to cutting back. That represents a double-digit increase year-over-year.

Of the 1,001 respondents, 47% of Canadians budgeted more carefully this Christmas season.

Of the reasons stated, credit card debt remains top of mind, with 43% concerned they will never pay their debts. Another third (36%) would need another credit card to afford Christmas shopping.

Whereas 39% fear not having enough money to feed their families, raising concerns on inflation—one of the main reasons for the extra restraint. Canada’s inflation rate is currently 1.8%, according to Statistics Canada. Meanwhile, grocery prices are rising faster than the rate of inflation, at 2.6%.

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