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

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Author Info

  • Richard M. Bird

    ()
    (University of Toronto)

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.

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File URL: http://icepp.gsu.edu/sites/default/files/documents/icepp/wp/ispwp1221.pdf
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Bibliographic Info

Paper provided by International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University in its series International Center for Public Policy Working Paper Series, at AYSPS, GSU with number paper1221.

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Length: 33 pages
Date of creation: 17 Apr 2012
Date of revision:
Handle: RePEc:ays:ispwps:paper1221

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Related research

Keywords: Canada; VAT; subnational taxes; intergovernmental fiscal relations;

This paper has been announced in the following NEP Reports:

References

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  1. Stanley L. Winer, 2011. "Reflections on the Role of Optimal Design in the Tax Policy Process," New Directions for Intelligent Government in Canada: Papers in Honour of Ian Stewart, in: Fred Gorbet & Andrew Sharpe (ed.), New Directions for Intelligent Government in Canada: Papers in Honour of Ian Stewart, pages 205-210 Centre for the Study of Living Standards.
  2. Richard M. Bird & Jack M. Mintz & Thomas A. Wilson, 2006. "Coordinating Federal and Provincial Sales Taxes: Lessons from the Canadian Experience," International Tax Program Papers 0607, International Tax Program, Institute for International Business, Joseph L. Rotman School of Management, University of Toronto.
  3. repec:cup:cbooks:9780521877657 is not listed on IDEAS
  4. Raj Chetty & Adam Looney & Kory Kroft, 2009. "Salience and taxation: theory and evidence," Finance and Economics Discussion Series 2009-11, Board of Governors of the Federal Reserve System (U.S.).
  5. Bird, Richard M. & Martinez-Vazquez, Jorge & Torgler, Benno, 2008. "Tax Effort in Developing Countries and High Income Countries: The Impact of Corruption, Voice and Accountability," Economic Analysis and Policy (EAP), Queensland University of Technology (QUT), School of Economics and Finance, vol. 38(1), pages 55-71, March.
  6. Grady, Patrick, 1990. "An Analysis of the Distributional Impact of the Goods and Services Tax," MPRA Paper 13144, University Library of Munich, Germany.
  7. Keen, Michael & Lockwood, Ben, 2006. "Is the VAT a Money Machine?," National Tax Journal, National Tax Association, vol. 59(4), pages 905-28, December .
  8. Chun-Yan Kuo & Thomas Mcgirr & Satya Poddar, 1988. "Measuring the Non-Neutralities of Sales and Excise Taxes in Canada," Development Discussion Papers 1988-08, JDI Executive Programs.
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