GST break will help Canadians cope with ‘vibecession’

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Deputy Prime Minister Chrystia Freeland says her government’s proposed GST measures will lead to a pick-up in consumer spending, even as Canadians continue to feel malaise about Canada’s economy.

“People have been talking about a vibecession and how that is a challenge for the Canadian economy,” said Freeland, during a press conference in Ottawa. “One of the positive impacts of this measure is to help Canadians get past that vibecession, because how Canadians feel really does have a real economic impact.”

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The term “vibecession” is a recent coinage that has become a popular was to describe the general public’s negative feelings about the economy, despite data that shows we are not in a recession.

This past Thursday, Freeland and Prime Minister Justin Trudeau announced a two-month pause on the goods and services tax for a select number of goods, including prepared meals from grocery stores, books, restaurant meals, Christmas trees and much more.

In addition to the GST break, the federal government also plans to send cheques of $250 to millions of Canadians with annual incomes up to $150,000, at a total cost of $6.3 billion to the federal government.

Following the announcement, economists upgraded growth forecasts for the first quarter of 2025.

“We’re assuming a good chunk of the stimulus cheques will be saved, but the GST/HST rebate will drive additional spending,” wrote Benjamin Reitzes, economist at the Bank of Montreal, in a note to clients last week.

BMO predicts growth for the first quarter of 2025 will be boosted from 1.7 per cent to 2.5 per cent, with the fourth quarter of this year and the second quarter of 2025 seeing a smaller upward move.

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The GST measure has been presented as a means of ending a weeks-long filibuster launched by the Conservative Party in the House of Commons, which has stopped the minority Liberal government from passing any legislation since September. The New Democratic Party voiced its support for the measure last week.

However, while speaking to reporters on Monday, NDP leader Jagmeet Singh said the government needs to expand the eligibility for the rebates to more people.

“We learned on Friday, that the cheques are being excluded from some of the most vulnerable Canadians: from seniors, from people living with disabilities, from students,” Singh said. “The Liberals have to fix their mess. They have to fix the cheques.”

The federal government has yet to table a Fall Economic Statement, although the Parliamentary Budget Officer reported last month the federal government has blown past its $40-billion deficit pledge. When asked about the price tag of the rebates, Freeland defended them.

“These measures are temporary and targeted,” she said. “They are not structural measures, that is entirely intentional.”

• Email: jgowling@postmedia.com

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