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Ottawa’s GST break and rebate cheques amount to bad policy

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From the Fraser Institute

By Jake Fuss and Grady Munro

On Thursday, the House of Commons passed legislation (tabled by the Trudeau government) that would temporarily suspend the federal Goods and Services Tax (GST) on select items from December 14 to February 15 at an estimated cost of $1.6 billion, as part of the government’s “more money in your pocket” plan. The legislation now goes to the Senate for approval.

The government has delayed a separate proposal—to give Canadians $250 rebate cheques—in light of NDP demands to expand eligibility to include seniors. The original proposal would have sent cheques to an estimated 18.7 million Canadians (who worked in 2023 and earned $150,000 or less) at a cost of $4.7 billion. While aimed at all Canadians, this proposal is eerily similar to the recent move by Ontario’s Ford government, which plans to send $200 cheques to Ontarians. And again, it’s just bad policy.

Why?

Consider this. During the recent discussion about increasing Old Age Security payments by 10 per cent for seniors aged 65 to 74, former Bank of Canada governor David Dodge said, “The last thing that we need to be spending money on at this point in time is boosting consumption for relatively well-off people.” This critique also applies to the Trudeau government’s $250 rebate cheques, which would go to many well-off Canadians. Indeed, based on the government’s original proposal, a couple earning a combined household income of up to $300,000 could receive these cheques.

Moreover, because onetime payouts and temporary tax breaks don’t incentivize people to work and invest, they don’t help raise living standards. But permanent tax cuts, such as reducing personal income tax rates or lowering capital gains taxes, would provide a stronger incentive for Canadians to work more and make investments because they get to keep more of the money they earn. That would help drive economic growth, create jobs and provide more economic opportunities for workers across the income spectrum.

In fact, the Trudeau government’s plan may actually hurt economic growth in the long run. The government is expected to run budget deficits for the foreseeable future, and will likely borrow the billions needed to pay for the GST break and $250 cheques. In other words, this “relief” package will likely increase the federal deficit in 2024 and potentially 2025. By borrowing more money, the government will increase the tax burden on future generations of Canadians who ultimately must pay off today’s debt. And just as lower taxes improve economic incentives, this higher future tax burden will worsen incentives and likely stifle economic growth and reduce living standards.

Don’t be deceived. While it’s nice to get a cheque in the mail and have a couple months free of the GST for some items, the Trudeau government’s “more money in your pocket” plan is bad policy.

Jake Fuss

Director, Fiscal Studies, Fraser Institute

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Essential goods shouldn’t be taxed

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From the Canadian Taxpayers Federation

By Jay Goldberg 

The Trudeau government’s two-month GST holiday on certain items has been called many things.

Former finance minister Chrystia Freeland resignation letter suggests she thinks it’s a “gimmick.”

Conservative Leader Pierre Poilievre has called it a “tax trick.”

But here’s a more fundamental question: If the government thinks Canadians needs a sales tax holiday on certain items, why are those basics taxed in the first place?

Items like car seats, diapers, and pre-prepared foods are all taxed by the feds. They’re all also subject to the federal government’s sales tax holiday, which Prime Minister Justin Trudeau says was triggered because Canadians are having a hard time making ends meet.

“Our government can’t set prices, but we can give Canadians, and especially working Canadians, more money back in their pocket,” said Trudeau at his GST holiday announcement.

At least Trudeau seems to know it’s bad for governments to set prices. But the government does raise prices by adding sales tax on top of goods Canadians have to buy.

And you don’t need to be a parent to know that car seats and diapers are among the most essential goods on a parent’s shopping list.

Take a car seat. A mid-tier car seat costs around $250. The federal sales tax, which is currently at five per cent, adds $12.50 to the final cost of that car seat.

Parents across the country are no doubt asking why things like car seats and diapers were taxed by the feds in November, will be taxed again by the feds in March, but aren’t being taxed right now.

What justification can the government possibly give to parents on Feb. 16, 2025 – the day this sales tax holiday ends – for once again taxing things like car seats and diapers?

The same goes for pre-prepared meals. Many Canadians buy pre-prepared food at grocery stores to bring to work for lunch or to eat on the go. Why are the ingredients for that pre-prepared meal not taxed but the final meal is? And why take the tax off a grocery store deli sandwich now but not a few months from now?

There’s even more of an argument to be made on this front because many provinces don’t tax a lot of the items that are part of the feds’ sales tax holiday.

Take Ontario as an example.

Canada’s most populous province doesn’t tax things like books, children’s clothing, car seats, and diapers. Some pre-prepared foods aren’t taxed either.

If provinces don’t tax these items, why do the feds?

The Trudeau government took inspiration from the NDP when it comes to the GST break. It ought to also take inspiration from the party’s call to make relief permanent.

Trudeau’s GST announcement came just days after NDP Leader Jagmeet Singh called for the permanent removal of the federal sales tax on items like pre-prepared meals, diapers, and car seats. Singh’s proposal actually went much further, and included ending the GST on home heating, as well as internet and phone bills.

In touting his proposal, Singh argued that “those taxes never should have been there in the first place.”

Singh is right. Essential goods shouldn’t be subject to the GST. Period.

Just days after Singh’s announcement, Trudeau played copycat with one of his own.

But a two-month reprieve pales in comparison to permanent relief.

If the Trudeau government wants to deliver real relief to struggling Canadian families, essential items that most provinces already don’t tax, such as diapers, car seats, and pre-prepared meals, should be permanently exempt from the GST.

Permanent sales tax relief is more than doable. The feds could deliver on it without hiking the deficit by taking a sledgehammer to the more than $40 billion a year they hand out in corporate welfare.

Anything less than a permanent sales tax break simply won’t cut it when it comes to cutting costs for Canadians.

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US Expands Biometric Technology in Airports Despite Privacy Concerns

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Biometric systems promise efficiency at airports, but concerns over data security and transparency persist.

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Biometric technology is being rolled out at US airports at an unprecedented pace, with plans to extend these systems to hundreds more locations in the coming years. The Transportation Security Administration (TSA) is driving a significant push toward facial recognition and other biometric tools, claiming improved efficiency and security. However, the expansion has sparked growing concerns, with privacy advocates and lawmakers voicing concerns about data security, transparency, and the potential for misuse of such technology.

US Customs and Border Protection (CBP) has already implemented its Biometric Facial Comparison system at 238 airports, including 14 international locations. This includes all CBP Preclearance sites and several major departure hubs. CBP says its Biometric Exit program is rapidly gaining traction, with new airport partners joining monthly and positive feedback reported from passengers.

Meanwhile, the TSA has equipped nearly 84 airports with its next-generation Credential Authentication Technology (CAT-2) scanners, which incorporate facial recognition. This rollout is part of a broader effort to bring biometrics to over 400 airports nationwide. These advancements are detailed in a TSA fact sheet aimed at building public awareness of the initiative.

Opposition and Privacy Concerns

Despite assurances from TSA and CBP, critics remain skeptical. Some lawmakers, led by Senator Jeff Merkley, argue that the TSA has yet to justify the need for biometric systems when previous technologies already authenticated IDs effectively. Privacy advocates warn that the widespread use of facial recognition could set a dangerous precedent, normalizing surveillance and threatening individual freedoms.

The debate is closely tied to the federal REAL ID Act, introduced two decades ago to standardize identification requirements for air travel. As of now, many states have failed to fully implement REAL ID standards, and only a portion of Americans have acquired compliant credentials. Reports indicate that fewer than half of Ohio residents and just 32 percent of Kentuckians have updated their IDs, even as the May 7, 2025, deadline approaches.

Biometric Adoption on the Global Stage

Beyond the US, biometric systems are gaining momentum worldwide. India’s Digi Yatra program has attracted 9 million active users, adding 30,000 new downloads daily. The program processes millions of flights while emphasizing privacy by storing data on users’ mobile devices rather than centralized databases. Plans are underway to expand the program further, including international pilots scheduled for mid-2025.

While biometric technology offers alleged benefits, such as faster boarding and enhanced security, it also poses serious risks. Privacy advocates caution against unchecked implementation, especially since, one day, this form of check-in is likely to be mandatory.

The TSA’s aggressive push for biometrics places the United States at the forefront of this global shift.

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