Yes, it extends to ANY privilege, including Christmas. If his behavior were problematic enough to warrant taking away gifts, I would do it. It would make no sense whatsoever to take away stuff he doesn't value. Living in my house isn't free for anyone, so you are probably far from being the only one who wouldn't want to grow up here. Malcolm and his brothers would have been taking their midnight bounty to Toys For Tots.
This isn't, however, dependent on my mood, it's dependent on his behavior. And he's totally aware of the deal. If he wants have something, I say "What are you willing to do to earn it?" If he misbehaves, I say "The next time x happens, you will be losing y." And then I deliver on it. And he knows I will.
Well, it was sort of based on behaviour, but a lot of what determined "acceptable behaviour" was contingent on their moods. For example, one day, it might be perfectly fine to, say, take a cookie from the cupboard, and the next day, that would be considered "stealing," and therefore, be punishable by loss of privileges, or I might be punished for screaming when my brother beat me up, because I should "go and get an adult instead," which was impossible if he was sitting on my back and pinning me to the floor. I remember a lot of weekends spent confined to the house for reasons I don't remember, and didn't even fully understand at the time, and a lot of my brother's and my toys seemed to be perpetually confiscated, and stashed away up in the high closet in what was my parents' room (it's now the guest room, since we had the attic renovated into a bedroom and study for them--anyway, I bet if you looked in the high closet in there now, you'd find random pieces of Connect Four, Tinkertoys, and maybe an old CD player that belonged to one or other of us). We still grew up to be reasonably nice people, and my parents became less strict once I got to high school and got involved in multiple extra-curricular activities that kept me away from home, and I guess they figured that if I could handle staying late into the evening after school to help set up for a dance with student council, go to band practice, go to the dance after band practice, and then help clean up, and still get up for school the next day (which I did many times), then I was responsible enough to be given more privileges.