Implications of the Introduction of the Goods and Services Tax for Families in Canada

Lori Curtis and JoAnn Kingston-Riechers

Canadian Public Policy, 2010, vol. 36, issue 4, 503-520

Abstract: We use the Quadratic Almost Ideal Demand System and the Canadian Family Expenditure Survey to investigate the welfare change for households, particularly those with children, attributable to the introduction of the Goods and Services Tax (GST) in Canada. We calculate the welfare change by estimating the expenditure difference necessary to maintain pre-GST indirect utility. We find that two in three households and one in three low income households were made worse off by the introduction of the GST. The figures are similar for households with children. More specifically, the stated policy goal of increasing the welfare of low and middle income households was not achieved.

Date: 2010
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