This month, Al welcomes back Sean McCormick, VP Business Development at Moneris Data Services to talk about consumer spending data in the first half of the tax holiday in Canada. Was it worth it for Canadians? Obviously every bit of savings helps. But what about Canadian Businesses? Did it change anyone’s shopping behaviour? Listen now to find out.
This month, Al welcomes back Sean McCormick, VP Business Development at Moneris Data Services to talk about consumer spending data in the first half of the tax holiday in Canada.
Was it worth it for Canadians? Obviously every bit of savings helps. But what about Canadian Businesses? Did it change anyone’s shopping behaviour?
Listen now to find out.
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JGB February Transcript
Allan: [00:00:00] It's February, and if you believe Ontario's Wiarton Willy, spring will soon arrive. Although Nova Scotia's Shubenacadie Sam would beg to differ, he predicts a long winter ahead and after shoveling my driveway for the third straight day, I'm beginning to think this whole Groundhog Day thing is an inexact science.
And for the shortest month in the calendar, February is quite eventful. We have the Chinese New Year, Groundhog Day, Valentine's Day, and in many provinces we have a Family Day long weekend, and of course there's that big football game this weekend and this year, February 15th also marks the end of the tax holiday in Canada.
That holiday was meant to provide a two month tax break for Canadians, and it did, but did it do anything to stimulate consumer spending? Well, we don't have prognosticating groundhogs, but we do have Sean McCormick and cold hard data. Sean will tell us what he saw in the first half of this tax holiday.
Why does this matter? Because it's just good business.[00:01:00]
I'm joined by our VP of Business Development at Moneris Data Services, Sean McCormick. Sean, thank you once again for joining me this month.
Sean: Yeah, my pleasure Al, always find a chat.
Allan: Now, uh, last month I, I kind of said that we aren't going to look back at 2024 anymore, but there is one last story that is kind of a big deal and, uh, we, I wanted to talk about it this month and that's the, the tax holiday that we're still going through actually, the Canadian federal government thought to give Canadian tax payers a break over the Christmas break and to stimulate maybe some spending, uh, that they would give us all a break from federal sales tax. Uh, and we have some numbers, at least for the first half of this tax holiday that can maybe. Give us a sense of whether that worked or not.
Sean: So we looked at the first month, so it was about a two month reprieve of, of the GST in certain categories. And if we look at December 14th to January 15th, overall transaction volume, so that's dollar volume, getting [00:02:00] pumped through the pipes, our pipes on tax exempt items that was down 4% across the country.
So. That tells you that, well, maybe you know, people were saving that 13%. Maybe there's an effect there. But you gotta look at two measures to get the full story. So the transaction count, so the number of transactions, right? Was that actually down 1%? Okay. So were consumers going out and buying more things, buying more often?
Were they stimulating the economy doing that? Our data suggests that they were not, transaction count was down, dollar volume was down a little bit more. So consumers maintained course on their normal shopping habits and maybe enjoyed a little bit of savings here and there. But if you were a merchant and you're asking the question broadly, speaking nationally in aggregate, did it help support more spending over that span so far in the first [00:03:00] month of our analysis, the answer is no.
Allan: That's interesting because I mean, and I'm wondering if some of it is maybe just a communication issue because I remember just before Christmas going to the mall to buy my daughter a Wicked t-shirt for Christmas and seeing rack with these shirts, mark $10 and, and that that's the price I paid. Which was kind of weird when I walked out of the store thinking I got away with something. Only then did I realize, oh yeah, the tax holidays. So I'm wondering if maybe Canadians just weren't aware or, or forgot that it was happening.
Sean: Well, you don't have to go very far to find an accountant in this country that will tell you that tax policy and tax law is incredibly complicated. And maybe this is part and parcel of that. But it was a complicated offer to consumers is is my personal feeling, Al there were certain things that were exempt and certain things that we're not. And when you ask a consumer. To think too deeply about a purchase, they won't make purchase, right? Like you go into a car dealership to buy a car, that car [00:04:00] salesman wants you to buy that car in an hour, right?
They don't want to give you time to think about it because. Your brain will go in other directions and you just won't make the purchase. And I think that the same thing holds true for most purchases. And when the government came out and said, well, you're gonna save money on this, this, this, and this, but all of this over here, I didn't have time myself.
I didn't have time to think about that. It was the holiday season. I'm busy trying to figure out how, how to please the people closest to me with gifts that are, that are applicable to their lifestyles, right? I didn't have time to think about, well, what was GST exempt and what wasn't? I mean, I went into the, into the beer store just a couple of weeks ago and, uh, I paid 44 bucks for a case of beer and I thought, okay, I, I'm actually, I'm gonna go buy another case of beer.
I forgot that beer was included. And I, I tend to probably over index on my beer drinking compared with the average 51 year old Canadian. So. I think that maybe consumers had a little bit too much to think about and they were probably happy to not [00:05:00] pay the GST, but they didn't run out and say, okay, I can buy this, this, this, and this.
Alright, I'm gonna go and buy those things. That just didn't happen.
Allan: And that, that would be true obviously over the holidays especially because you're probably, you're, you're not gonna adjust how you're shopping. You're gonna buy what you need to buy and, and there's a pleasant surprise if you saved on that. So I'm wondering though, in the second half of this, uh, tax holiday, whether maybe we will see some people taking more advantage of the tax holiday and spending a little bit more because they can get that tax break.
Sean: Well, yeah, I mean, it is, I, I will probably go back to the beer store and buy more beer because I know that it's cheap. In fact, I even floated the idea of stocking up for the summer. I know that, that, you know, we're gonna go through a case of beer every couple weeks, and maybe I should buy 10 cases and put it in the garage like I. If I can save 13% on alcohol in the summer, then that's a, that's a good deal. I should do that.
Now there are, um, categories. One category in particular does stand out as being one where consumers took advantage and it seems like children's [00:06:00] and infant apparel stores. Right. Um, did see a noticeable increase in transaction count during the first month of the GST holiday. Their transaction counts were up 8%.
Okay. That's significant. Yeah. On the other hand, a hobby toy and game stores had a 5% decline in average transaction size while the transaction count was unchanged, so that didn't spur more spending. But customers were happy to enjoy the savings while they were at the till.
Allan: It'll be interesting to see what the, the numbers tell us about the second half of this tax holiday. And now we have the tariff story that we're gonna probably have to tackle coming up. So looking forward to having you back on next month, and I think we're gonna have lots to talk about.
Thank you, Sean, for your time this month.
Sean: You bet Al.
Allan: And joining me right now is Daniel Stranges. He's a senior events and [00:07:00] sponsorship specialist. Daniel, thank you so much for joining me today.
Daniel: Hey Al, thanks for having me.
Allan: Now, uh, we're talking about the February calendar and I hear that we've got, uh, just one thing to talk about. What would that be?
Daniel: Yes, we do. So once again, Moneris is proud to be supporting the Second Harvest Hero Sweepstakes, which is running from February 4th to March 11th, presented by Moneris. During the sweepstakes, you can win a bunch of amazing prize. This includes a dream vacation package, some premium kitchen gear, and tons more. Now, last year alone, this sweepstakes raised enough money to provide food for more than 269,000 meals.
For people in need.
Allan: Wow.
Daniel: And once again, this year all proceeds will support Second Harvest Food Rescue and redistribution efforts all across Canada.
Allan: Amazing. And, and a charity that's needed now more than ever.
Daniel: Oh, that's for sure.
Allan: So for folks who wanna buy tickets for the sweepstakes, where would they go?
Daniel: For tickets and for more information be sure to visit secondharvest.ca.
Allan: Okay. Thank you very much for your time today, Daniel.
Daniel: My pleasure, [00:08:00] Al. Thanks for having me.
Allan: And that's all we have for this episode. Before I sign off, I'll post links to the Second Harvest Sweepstakes and Sean's team at Moneris Data Services in the show notes. If you have any questions about anything business related, you can email us at podcast@moneris.com and we'll try to answer them in future episodes.
On behalf of Daniel, Sean, myself, and the rest of Moneris, it's just good business saying thank you for listening and see you in March.