The GST/HST: Creating an Integrated Sales Tax in a Federal Country

Richard Bird

International Center for Public Policy Working Paper Series, at AYSPS, GSU from International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University

Abstract: Canada is not a country with a reputation for bold experimentation. However, Canadian experience demonstrates conclusively that an invoice-credit, destination-based value-added tax (VAT) is workable at the subnational level, with both federal and provincial governments retaining full control over the rates of their sales taxes as well as retaining a surprising degree of policy freedom with respect to the base of the tax. As this paper shows against the background of a concise history of sales taxation in Canada, it has taken decades of federal-provincial negotiations to produce the present substantially integrated national and provincial sales tax system. Moreover, the process not yet complete and the results are far from perfect. Nonetheless, Canada has shown that not only can VATs be introduced at the subnational level but that they can work surprisingly well – at least in a country with an over-riding national VAT.

Keywords: Canada; VAT; subnational taxes; intergovernmental fiscal relations (search for similar items in EconPapers)
Pages: 33 pages
Date: 2012-04-17
New Economics Papers: this item is included in nep-acc, nep-pbe and nep-pub
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Journal Article: The GST/HST: Creating an Integrated Sales Tax in a Federal Country (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:ays:ispwps:paper1221

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