However, a few months before the introduction of the GST, the provinces gradually seemed to abandon the arguments on which they had based their opposition. On 30 August , the Quebec and federal governments announced the signing of an agreement under which Ottawa would transfer to the province full responsibility for administration of the GST in Quebec, and the Government of Quebec would harmonize its provincial sales tax base with that of the federal tax.
The new QST was introduced in two stages, on 1 January for personal property, and on 1 July for services and real property. This would be the only agreement which the federal government would manage to reach before the GST was introduced on 1 January Support for the introduction of the GST was far from unanimous. In early , the provinces appeared to be less reluctant to harmonize their respective sales taxes with the GST.
Some implied they might be on the verge of reaching an agreement with Ottawa. In February , the Saskatchewan government said it would harmonize its sales tax with the GST starting in However, the NPD government elected in Saskatchewan in October made it known that it was abandoning the harmonization plan.
After believing that harmonization would become a reality, Ottawa suddenly saw the climate deteriorate toward late and, until the end of , there seemed to be little likelihood that the provincial and federal taxes would be harmonized.
On 20 June , the Finance Committee published its recommendations. The national VAT would thus have a federal component and a provincial component. The Committee believed at the time that the provinces would agree to harmonize their respective sales taxes with the proposed new national tax because of the benefits afforded by a national VAT, particularly: a simplified tax system; reduced administrative and compliance costs; less bureaucracy as a result of the elimination of one complete order of government; and various economic benefits.
In each case, the proposal was for one national sales tax, levied on the same base across the country, which would have been collected by the federal government. Businesses would have seen their compliance costs substantially reduced, because they would no longer have had to deal with two tax authorities. To avoid putting too great a strain on provincial revenues, the federal government planned to introduce sales tax credits for production inputs gradually over a period of three years.
To induce the provinces to harmonize their respective taxes with the GST, the federal government offered those that agreed to do so greater room to manoeuvre in the areas of personal and corporate income tax. The provinces rejected all these federal proposals. For some provinces, the loss of revenue following harmonization would be too great. In addition, harmonization would mean a transfer of the corporate tax burden to consumers, an idea generally opposed by the provinces.
From October until the end of , there was no public movement on harmonization. Some believe that the election in Ontario in June of a Conservative government that had promised to harmonize the systems would be the catalyst for harmonizing sales taxes across Canada.
However, in March , Ontario announced that the province had been unable to reach an agreement with the federal government. As a result, they would not have been entitled to assistance if they had agreed to harmonization under the letter of understanding of 23 April The western and Maritime provinces opposed the proposed compensation, deeming it unfair.
Except perhaps for Prince Edward Island, no other province appears likely to harmonize its sales tax with the GST in the near future. The provinces are opposed to harmonization for a variety of reasons.
Immediately after discussions on the GST ended in April , the provinces denounced the federal decision as unconstitutional, maintaining that a tax on goods and services represented flagrant interference in a field of taxation traditionally reserved for the provinces.
It was generally conceded, however, that the federal government had unlimited taxing powers and that it could employ a method of taxation already used by the provinces. This decision notwithstanding, the provinces continue to oppose harmonization for five reasons. First, the provinces are reluctant to accept harmonization because this tax is politically very risky.
It is obvious that, by going ahead with harmonization and broadening their tax bases, the provinces would incur part of the political cost associated with the GST. Second, by agreeing to harmonize their respective sales taxes with the federal system, the provinces would exempt business production inputs. Harmonization would therefore mean transferring the corporate tax burden to the consumer.
This is still a major argument for a number of provinces. Third, the provinces have always feared giving up significant discretionary powers over fiscal policy in a harmonized system. Because they could no longer set the tax base or rate, they would lose any independence and flexibility with regard to their respective retail sales taxes. In the agreement, however, the federal government granted the participating provinces increased powers in the fields of individual and corporate taxation.
Fourth, the provinces are also opposed to harmonization for reasons of administrative complexity. And yet the agreement signed in October provides that the federal government, not the provinces, will be responsible for collecting the HST. There is no doubt that a perfectly harmonized system would make tax collection easier and that compliance costs for businesses particularly small businesses would be reduced.
For some of them, however, a system that differed from region to region, like that of the HST, would lead to problems and increased compliance costs. Effective tax rates and bases varying from region to region would complicate the tax treatment of interprovincial transactions.
Under the last agreement signed, interprovincial transactions not confined to the harmonized provinces appear to be more complex because the tax basis and effective tax rates differ from one transaction to the next depending on the province concerned. In an interprovincial transaction toward a province that has adopted the GST, a business registered in a non-harmonized province is nevertheless required to collect the HST.
Conversely, where a transaction occurs in a non-participating province, the business registered under the HST system does not have to collect the provincial share of the HST. Lastly, the provinces have always claimed that adopting an HST would lead to lost revenue and budgetary problems.
Even with a broader base, several provinces would face a decrease in revenue because of having to reimburse production input taxes. To counter this argument, the federal government is promising to compensate the provinces through its adjustment assistance program. In addition, the federal government is granting increased authority in the fields of individual and corporate taxes to the provinces that have signed agreements. Taken together, these measures should help the provinces that have moved to harmonization to offset the shortfall in their revenues, at least temporarily.
Attempts to harmonize the GST and provincial sales taxes have seen many ups and downs over the years. To date, only Quebec and three Atlantic provinces have agreed to harmonize their provincial sales taxes, but their actions have not induced the other provinces to do the same. One might have believed that Prince Edward Island would be added to the list after the HST was introduced, but it remains the only non-participating province east of the Ottawa River, and it is unlikely that its eventual participation will help change the status quo in the other provinces.
Ontario, however, could play a key role in bringing about the harmonization of sales taxes across Canada, and even the inclusion of the sales tax in advertised prices.
The federal government seems disinclined to change its position, and the Minister of Finance has admitted that negotiations with the non-participating provinces are at a standstill. Although the government is pleased with the agreements reached with three of the Atlantic provinces, those agreements put it in a delicate situation. It will not find it easy to alter the current proposal to satisfy the other provinces without jeopardizing the administrative benefits of the harmonized system because, for reasons of administrative simplicity, the same rules must apply across Canada.
For example, it would be impossible to have one adjustment assistance formula and different tax bases in Eastern and Western Canada.
Apart from that, it appears virtually impossible that a single-rate national sales tax will one day apply all across Canada. At best, the federal government could hope for four regional sales taxes: one for British Columbia, Saskatchewan, Manitoba and Ontario; a second for Alberta and the Territories; a third for Quebec; and a fourth for the Atlantic provinces. However, this situation would not do any more to facilitate the inclusion of the sales tax in advertised prices. For individuals and corporations, harmonization could also mean higher taxes.
Nova Scotia and New Brunswick have already announced new corporate capital taxes. As noted above, the GST has been controversial and not unanimously accepted. Although the government decided not to replace it in , it was not for failing to consider alternatives, but rather because those alternatives seemed to raise even more significant problems.
A brief overview of some of those options and related problems is provided below. To date, Japan is the only industrialized country that has opted for this type of VAT. A BTT is easy to administer: businesses calculate the amount of tax payable by multiplying their total sales by the tax rate, then subtracting their total purchases, also multiplied by the same rate. Because a BTT applies to all transactions and because businesses therefore do not have to distinguish between taxable transactions and zero-rated or exempt transactions, the tax paid or collected on each transaction does not have to be recorded for accounting purposes as is the case with the GST.
The result is greater administrative simplicity. In addition, businesses base their calculations on accounting information already available to them, which reduces their compliance costs. However, these benefits are reduced in a harmonization context, such as that in Canada, in which rates vary from one province or region to the next.
In this situation, the destination province of intermediate goods must be traced in order to apply the appropriate rates. In addition, certain goods and services could not be zero-rated or tax-exempt under a BTT. Consequently, to preserve the principle of business accounting and the essence of the BTT, the tax base would have to be expanded, a measure that has proven unpopular and which the government seems disinclined to take.
In short, assuming a very broad tax base and a uniform tax rate across the country, the BTT would be simpler to implement than the GST. A BTT could thus have been a viable alternative if the federal government had agreed to: apply it at the federal level only, i. Create a personalised content profile. Measure ad performance. Select basic ads. Create a personalised ads profile. Select personalised ads.
Apply market research to generate audience insights. Measure content performance. Develop and improve products. List of Partners vendors. Canada's harmonized sales tax HST is a consumption tax paid by local consumers and businesses. As the name implies, it "harmonizes" combines the nation's federal goods and services tax and various provincial sales taxes.
Five Canadian provinces use the HST. Proponents of the HST argue it improves the competitiveness of Canadian businesses by simplifying their administrative costs, leading to lower prices for consumers.
The vendor collects the tax proceeds by adding the HST rate to the cost of goods and services and then remits the collected tax to the Canada Revenue Agency CRA , the tax division of the federal government.
Each province had its own rates, resulting in significant differences in the sales taxes throughout Canada. The concept behind the HST was to streamline the recording and collection of federal and provincial sales taxes by combining them into a single, consistent levy across the country. Advocates argue it should reduce costs for businesses and ultimately customers since it simplifies their sales-tax-related bookkeeping.
Unfortunately, in practice, the HST can often complicate companies' lives instead. While the aim was to create a national sales tax, the Canadian government made adoption of the HST optional—and many provinces opted not to, keeping their separate systems and rates instead. The B. But former premier Bill Vander Zalm is spearheading a petition drive to force a non-binding referendum to repeal the tax under the province's recall and initiative legislation. In Ontario, the opposition criticized Revenue Minister John Wilkinson's advice to consumers to make some purchases ahead of Saturday.
NDP Leader Andrea Horwath said advice from the revenue minister to buy gym memberships, summer trips and theatre subscriptions ahead of the tax is an admission that the HST is going to cost families more than they can afford. Children's footwear designed for babies and girls and boys up to and including girls' size 6 and boys' size 6 without a numerical size that is designated for girls or boys in size small, medium or large excluding skates, rollerblades, ski-boots, footwear that has cleats, or similar footwear, adult-sized footwear even if acquired for a child, and footwear designed to prevent bodily injury.
Harmonized Sales Tax. Ontario's Fiscal Cycle. Ontario's Economy. Ontario's Tax System.
0コメント