The News Rundown

Liberals to cut GST on beer, children’s toys and Christmas trees

The federal Liberals are hoping to give Canadians a cheaper Christmas with a GST holiday and a $250 cheque to millions of Canadians next spring for a total cost of nearly $6.3 billion.
Prime Minister Justin Trudeau announced Thursday that his government will be temporarily cutting the GST on a huge number of products as of Dec. 14.
This new tax break will apply to: Prepared foods, including vegetable trays, pre-made meals and salads, sandwiches, Restaurant meals, whether dine-in, takeout, or delivery, Snacks, including chips, candy, and granola bars, Beer, wine, cider, and pre-mixed alcoholic beverages below 7 per cent ABV, Children’s clothing and footwear, car seats, and diapers, Children’s toys, such as board games, dolls, and video game consoles, Books, print newspapers, puzzles for all ages, and Christmas trees.
The Liberals also announced that millions of Canadians will get a $250 cheque next spring despite Trudeau previously saying that sending people more money would add to inflation.
Liberals plan to implement a new Working Canadians Rebate for each Canadian earning up to $150,000. The rebate is expected to roll out to 18.7 million Canadians before the next election, which is scheduled for October 2025 but could happen earlier than that.
Trudeau acknowledged last week that even though inflation is down and interest rates are falling, Canadians are still feeling the bite from higher prices. And while the government can't help with prices at the checkout counter, it said it can put more money in people's pockets.
Asked why people making $150,000 annually need extra money, Trudeau defended the move by saying his government is not sending a cheque to millionaires: “I will highlight the costs have gone up for everyone, and even someone making $130,000 or $140,000 a year is cutting back on restaurants, is thinking twice about what groceries they can buy, is being thoughtful about the price pressures on us all,” he said.
Finance Minister Chrystia Freeland said these announcements are about providing relief to all Canadians after a difficult economic period: “Things have been hard. They are getting better. Our economy really looks like it is having a soft landing from the COVID recession, and this is about making life a little bit easier, because we have the space now to do it,” she said.
In a news conference on Monday, Freeland said there's a disconnect between recent good news on inflation and interest rates and how Canadians are feeling about the economy, something she said is being referred to as a "vibecession."
The tax cut is meant to help bridge that gap and stimulate consumer spending, she said. Freeland's exact words were: "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."
That's right, Freeland created the word "vibecession" to describe the incredible hardships that Canadians have been facing over the past 5 years. This is the disconnect that the Liberal government experiences differently from regular Canadians.
The government’s GST reduction is actually a short-term tax holiday on certain items that will last two months. There are decades worth of economic research showing that when governments create short-term tax breaks, they may change the timing of consumption, but they won’t contribute to actual economic growth. One-time tax rebates are also a terrible way to provide tax relief. When you cut income tax rates, you improve incentives for people to work and invest because they get to keep a larger share of their earnings, helping the economy grow. One-time rebates that you get regardless of the economic choices you make has no similar effect.
We also have to remember that the federal government is currently running a large deficit. This raises the question of who will have to pay the $4.7 billion bill for the one-time payments announced today. The answer is that the government will have to borrow the money and therefore future taxpayers will have to either pay it off or service the extra debt indefinitely. The money the Trudeau government will send out won’t come out of thin air, it’ll have to be borrowed with the burden falling on future taxpayers.
The tax holiday will also require retailers to reprogram point of sale systems twice in a two-month window. In addition, some small manufacturers and retailers will undoubtedly question why they are excluded from the exemption. We also need to note that six weeks after the sales tax holiday ends in mid-February, government plans to hike the carbon tax by 19% on April 1 while cutting the carbon rebate to small businesses by nearly half.
This holiday also affects some provinces more than others even though the GST is set to 5% across all provinces. For example, British Columbians will be saving less than many other Canadians with the federal government’s GST/HST tax break. People from BC who pay five per cent GST and seven per cent provincial sales tax at the till — are going to be saving only the GST on qualifying items while still paying the PST. Meanwhile, consumers in Ontario and the 4 maritime provinces that have an HST will save 13 or 15 per cent on their purchases.
The Opposition BC Conservatives released a Christmas-themed attack ad Thursday that portrayed Eby as the Grinch for not only the delay in the BC's own promised rebate cheques, but for choosing not to exempt all items Ottawa is exempting from the GST from provincial sales tax.
The rebates of up to $500 per person, or $1,000 per household, were promised by the BC NDP in the October election. Although they did not come with a specified timeline, the NDP government has been saying since October it wants to begin helping people with cost-of-living challenges immediately. The legislature will not begin sitting again until next February, leaving a 4 month break in between election and the first moment that new bills could be passed.
Ontario already had eliminated the provincial portion of the HST from some of the goods proposed for the federal exemption, including children's clothing, shoes, diapers, books and newspapers.
Ontario Premier Doug Ford told a press conference on Friday that "We did it two years ago. We just didn't go out there and do cartwheels. Eighty per cent of what they say they're going to do, we're doing."
Meanwhile, New Brunswick Premier Susan Holt said Friday that the tax break could cost the province $62 million. Prince Edward Island Premier Dennis King expressed similar concerns on Friday. He said the measure would cost his province $14 million.
The federal government says the tax holiday will cost the federal treasury an estimated $1.6 billion in foregone revenue. But economist Trevor Tombe estimates that covering the provincial portion would make the actual cost of the tax break almost double the government's estimate. He said: "For the HST provinces, the compensation they're entitled to in the tax coordination agreements would bring the total cost to something like $3 billion."
NDP Leader Jagmeet Singh says while he supports the Liberal plan to give Canadians a GST break during the holidays, he won’t back the $250 rebate proposal unless the government expands eligibility to the most vulnerable. Singh said he initially supported the idea because he thought the rebate cheques would go to anyone who earned under $150,000 last year. But the so-called working Canadians rebate will be sent to those who had an income, leaving out people Singh said need the help, like seniors, students, people who are on disability benefits and those who were not able to work last year.
The GST holiday did pass in a confidence vote in the Thursday with the NDP voting in favour of it, which prompted Conservative Leader Pierre Poilievre to lambast Singh by saying that he had “broken his word yet again” by saying the NDP had walked away from their deal with the Liberals, saying: “Remember, Jagmeet Singh said the deal was ripped up. Well now, he’s taped it right back together.” The Bloc Québécois is also pushing for the rebates to be sent to seniors and retirees, and voted with the Conservatives against the GST holiday.
In any case, the GST holiday will not provide the amount of relief that people want it to, and will not boost the economy, so we have to ask the question, why is the government doing this? Well, their poll numbers are flagging, and the cynics could point to a simple act of vote buying in the face of overwhelming opposition. At the end, we're just going to be paying for it anyway, so hopefully no one is fooled by the holiday and comes back to the real world.
Supplementals:

Alberta has made changes to auto-insurance that will begin to rollout in 2027.
The government is making changes to allow rate hikes over the next year and removing the ability for those injured to sue in most cases.
The media is calling the new system a predominantly new-fault system but the government calls it care first.
Finance Minister Nate Horner said that bad drivers will pay with higher premiums and the government knows that Albertans pride themselves on personal responsibility and that if you screw up you should pay for it.
Crash victims will still be able to sue at-fault drivers for pain and suffering if the at fault driver is convicted of a criminal offence such as dangerous driving or impaired driving.
If expenses go beyond what’s covered by standard benefits, injured parties could also sue for out of pocket expenses.
Splitting this apart there’s a lot of uniqueness about the new system.
It’s not the same no-fault system seen in BC, Saskatchewan, or Manitoba.
It’s also not turning Alberta’s unique in Canada private insurance industry into a public Crown insurance corporation like ICBC.
Claims and pay outs will be handled as if it were a public system where any medical needs will be covered by insurance.
Alberta has the second highest average insurance rates in the country as $2,015 next to Ontario.
The NDP and other economically juvenile minded people have called for caps and Finance Minister Nate Horner said “caps don’t work, yours didn’t work - ours didn’t either. It’s a short-term initiative to slow the bleeding.”
Under the regime as it has been there’s one profitable insurance company, two left, and more are considering leaving.
People will say at this point, why not go public? A public insurer would have start up costs of $3b and would take 4-5 years to start up.
The report commissioned by the province says that Albertans can expect an average savings of about $400 once the changes come in.
There’s a but though. Rate hikes will be allowed to go on for the next 2 years. Insurers will be able to increase rates by 7.5% per year which means that under the new system rates should be where they are today.
That’s not a great consolation to many but we’re left to ask if this is really the best we have.
We see the issues with ICBC. We see systems that work ‘ok’ in Saskatchewan. But the big lingering issue is the question of whether or not Albertans would be happy moving away from a system we’ve had for the better part of 25 years.
The government has set up a website at care-first.alberta.ca detailing the changes to the system.
Changes that the media hasn’t talked about.
Again Alberta is being a trail-blazer when it comes to auto insurance and we’ll have to wait and see if these changes will result in lower premiums and a more effective system.
Supplementals:

BC Ferries warns of potential 30% fare hike as costs rise

People looking to travel along the BC coast on BC Ferries may be seeing fare hikes in the future, despite half a billion dollars invested by the government in 2023 supposedly guaranteeing against just that.
The announcement from BC Ferries CEO Nicholas Jiminez said the approximate increase is 30 per cent in order for the publicly-owned company to keep up with inflation and manage operating and capital costs.
B.C. Ferries has planned for 15 Island-class vessel replacements between now and 2030. Four all-electric versions of those vessels — which are used on smaller routes — are currently being built in Romania. The company is also planning to build seven new large ships for its major runs,
With 27 terminals and with 16 aging vessels in its fleet — for example, the Queen of New Westminster is now 60 years old — building new ships and retrofitting terminals is a top priority, Jimenez told a Victoria Chamber of Commerce meeting recently.
However, Jimenez said the estimated cost to build vessels has risen by approximately 40 per cent since 2020, adding that with the current fares, they still don’t bring in the revenue to cover their operating costs and capital needs.
Premier David Eby said on Wednesday: “We’ll work with BC Ferries and will ensure that affordability is maintained for British Columbians. There is an onus and there is a responsibility on BC Ferries to do what they can to bring down their operating costs as well.”
Last year, the province said it was providing $500 million to B.C. Ferries to help keep fares down, while the Office of the B.C. Ferries Commissioner overseeing the private corporation, whose single shareholder is the provincial government, announced in October 2023 that BC Ferries could only raise annual fares by a maximum increase of 3.2 per cent until 2027. The province had said that without the additional funding, the fare increase would have been about 9.2 per cent a year.
During an appearance on Victoria radio station CFAX 1070 Eby called the amount "a lot of money" that was sent in order to keep fares flat. Eby said: “We’ve provided direct financial support to B.C. Ferries to ensure that British Columbians could rely on consistent fares [which] is very important to British Columbians, especially right now when they’re feeling that affordability pressure. We need to see from them some efforts around cost control, particularly related to administration and the decisions that they are making in this cost-sensitive time for British Columbians."
Whether this means scaling back the pay of top ferry executives or scaling back their expansion and replacement plans for the next decade, will have to be hashed out in discussions.
The Conservative Party of B.C. promised during the election to 'overhaul' BC Ferries through an agenda that would include building up the local ship-building industry and using technology to make the service more efficient, even automate it in parts.
Regardless of how much money David Eby gifts to BC Ferries, it's clear that much higher prices will be in the future for ferry customers, and at the end of the day, it's people in small towns all over the coast that are going to be feeling the aftershocks much more than people realize. These are also areas that voted pretty solidly for the NDP, and the fact this announcement came out less than a month after the election definitely seems suspicious. It's another case of elections having consequences and people getting exactly what they vote for.
Supplementals:

Firing Line

Should Canada retaliate if Trump makes good on 25 per cent tariff threat?

This past Monday incoming US President Donald Trump said that on day 1 Canada and Mexico would be subject to a 25% tariff on ALL products.
This had the Canadian media into a firestorm but if we read the full release from Donald Trump we get to a point where it’s actually about the border.
The statement reads in part: “thousands of people are pouring through Mexico and Canada, bringing Crime and Drugs at levels never seen before. Right now a Caravan coming from Mexico, composed of thousands of people, seems to be unstoppable in its quest to come through our currently Open Border”
It continues, “this Tariff will remain in effect until such time as Drugs, in particular Fentanyl, and all Illegal Aliens stop this Invasion of our Country! Both Mexico and Canada have the absolute right and power to easily solve this long simmering problem. We hereby demand that they use this power, and until such time that they do, it is time for them to pay a very big price!”
Initially for the better part of the week media discussion and opinion panelist discussion was about whether Canada should respond and what section of the US economy would be best to hit back against.
This is downright hilarious for three reasons.
The first is that Canada’s economy is tiny compared to that of the US and the reality is that any tariff we land on the US would be similar to a mosquito bite.
The second is that this happened in the first Trump administration most notably over steel, aluminum, and softwood. People haven’t learnt since then, both in government and media.
Third, this isn’t an issue about tariffs. It’s about securing the border and creating a negotiating stand point for which Trump can secure his southern border.
There have been cases where bad actors and terrorists have gone into the US from Canada.
There is a flow of drugs from Canada into the US.
Both of these aren’t as bad as what goes into the US from Mexico but in the Trump world of negotiation and deal making if he can show that he has got Canada to do something, anything really, then Mexico has to do a whole lot more.
For our part we should be using this as an opportunity to work closely with the US and ensure that following Trump’s promise to deport illegals they don’t migrate into Canada through the vast undefended swaths of our border.
And with that we need to level up our border security.
There are only a few politicians in Canada that get this. Almost no one in the media gets it.
Trudeau met with the Premier’s this week on this file virtually and there now appears to be consensus that more needs to be done with the border which is something Quebec Premier Francois Legault has been asking for since the Roxham Road debacle.
Alberta Premier Danielle Smith is also one of the leaders that gets it.
She said, “The incoming US Donald Trump administration has valid concerns related to illegal activities at our shared border. We are calling on the federal government to work with the incoming administration to resolve these issues immediately… Fortunately, the vast majority of Alberta’s energy exports to the U.S. are delivered through secure and safe pipelines which do not in any way contribute to these illegal activities at the border.”
She also said that she is looking for ways to have the province contribute resources to patrol its border with Montana in an effort to show that Alberta is doing its part on border security.
The discussions this week has also spurred Conservative Leader Pierre Poilievre to say that a “Canada First” plan is needed, in a media availability event he said, “President Trump has the right to put his workers and his nations security first. I will put Canada's workers and Canada's security first. We need a Prime Minister with the brains and backbone to stand up for this country.”
At the end of the week though the situation culminated Justin Trudeau making a surprise visit to Florida to meet with Trump over dinner at Mar-a-Lago.
We don’t know much about the substance of the meeting but what we do know is that Public Safety Minister Dominic Leblanc was in attendance as was Chief of Staff Katie Telford.
Trudeau is said to have promised border helicopters to the President to better patrol the border.
Donald Trump’s people believe the meeting “very productive.”
Donald Trump also said on Truth Social that topics included Fentanyl, the Drug crisis, illegal immigration, the US trade deficit, and the border were all discussed.
Energy and the arctic were also discussed and some are thought that the US is looking to resume the Biden-cancelled Keystone XL pipeline.
The border, drugs, and energy. That’s what it came down to and the media was absent on that until Trudeau returned from Florida.
This should worry everyone as it shows that the media has learnt nothing and more so than ever is in a situation where they don’t know what they’re doing and can’t be trusted.
Supplementals:

Quote of the Week

“President Trump has the right to put his workers and his nation's security first. I will put Canada's workers and Canada's security first. We need a Prime Minister with the brains and backbone to stand up for this country.” - Conservative leader Pierre Poilievre on a Canada First plan.

Word of the Week

Vibecession - a word that refers to a disconnect between the economy of a country and the general public's negative perception of it

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Show Data

Episode Title: The Vibes Are Off
Teaser: The Trudeau Liberals give Canadians a 2 month GST holiday, Alberta is looking at a different auto insurance approach, and BC Ferries is looking to raise fares by 30%. Also, Trump tariffs cause chaos in the Canadian media.
Recorded Date: November 30, 2024
Release Date: December 1, 2024
Duration: 1:05:16
Edit Notes: Shane cough

Podcast Summary Notes

Duration: XX:XX