Canada raises GST credit from $700 to $900 max to combat 6.2% food inflation
Canada’s Revenue Agency has confirmed this week a 25% GST credit refund increase for individuals and families on low incomes.
The Canadian GST/HST credit is a tax-free, quarterly payment helping low- and modest-income individuals and families offset sales tax. Eligibility is determined by filing a tax return, with payments automatically sent by the Canada Revenue Agency (CRA).
Canada is one of the countries which has opted not to introduce blunt VAT rate cuts to help with the cost of living crisis; instead it offers targeted GST ‘groceries refund’ to those in most need. A family of four stands to receive up to $1,890 this year, and about $1,400 a year for the following four years.
Whilst headline inflation has dropped to 2.4% in December 2025, food inflation is at 6.2% – the highest since August 2023. The federal government also provided a similar payment last fall in what it said was an effort to blunt the effect of high inflation on low and modest-income families.
In Europe, many countries have cut VAT to fight inflation effects. This comes despite IMF criticising inflation VAT cuts in a recent report, and has been joined by the OECD review of VAT reductions and other policy remedies.
Uzbekistan operates a simile VAT credit scheme.
