Taxation Made Easy: A Cost-Benefit Analysis of Prefilled Sales Tax Returns

Foroogh Nazari Chamaki (), Glenn Jenkins () and Frank Milne
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Foroogh Nazari Chamaki: Department of Economics, Queens University, Kingston, Ontario Canada

No 2025-13, Development Discussion Papers from JDI Executive Programs

Abstract: Small and medium-sized enterprises incur disproportionately high compliance costs under the current Goods and Services Tax/Harmonized Sales Tax (GST/HST) reporting system. To reduce these costs, some EU and Latin American countries have successfully adopted prefilled tax return systems supported by national e-invoicing infrastructures. Canada has not yet adopted this innovation. This study estimates the economic welfare improvement that would result if Canada were to implement a system of prefilled GST/HST returns. An integrated financial, economic, and stakeholder cost-benefit analysis is used. Implementation of a prefilled GST/HST return system in Canada is estimated to generate a present value of compliance cost savings over 10 years for GST-/HST-registered businesses of CAD 14.3 billion. Over 99% of these savings would accrue to over 3.7 million medium, small, and self-employed businesses. After netting out the costs of implementing this intervention, the economic welfare improvement for the economy would be CAD 13.6 billion. The additional income taxes collected due to the reduction in business costs have a positive budgetary impact on both the federal and provincial governments. Hence, after deducting estimated costs, the government’s net gain would be CAD 2.6 billion. The net after-tax gain by Canadian businesses would be approximately CAD 11 billion.

Keywords: Prefilling GST/HST Return; Digitalization of Tax System; E-invoicing; Compliance Cost of GST/HST in Canada; SMEs; GST/HST filers; Goods and Services Tax/Harmonized Sales Tax Filers by Jurisdiction. (search for similar items in EconPapers)
JEL-codes: D61 H25 H26 H83 O38 (search for similar items in EconPapers)
Pages: 34 Pages
Date: 2025-11-25
New Economics Papers: this item is included in nep-pbe, nep-pub and nep-sbm
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Working Paper: Taxation Made Easy: A Cost-Benefit Analysis of Prefilled Sales Tax Returns (2025)
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Persistent link: https://EconPapers.repec.org/RePEc:qed:dpaper:4639

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