Sales taxes in Canada

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In Canada there are three types of sales taxes: provincial sales taxes or PST, the federal Goods and Services Tax or GST and the Harmonized Sales Tax or HST.

Every province except Alberta implements a Provincial Sales Tax or the Harmonized Sales Tax. The Yukon Territory, Northwest Territories and Nunavut do not have any type of regional sales tax.

[edit] Provincial Sales Taxes

It has been suggested that QST#Quebec Sale Tax be merged into this article or section. (Discuss)

The amount of this tax varies from province to province:

  • British Columbia 7% (Reduced from 7.5% Oct 2004)
  • Saskatchewan 5% (Reduced from 7% as of Oct 28 2006)
    • The Saskatchewan side of the city of Lloydminster, which is bisected by the Alberta-Saskatchewan border, is exempt from PST by provincial law. This allows businesses on the Saskatchewan side to compete on a more equal footing with those on the Alberta side of the city.
  • Manitoba 7%
  • Ontario 8%
  • Quebec 7.5% nominally, but is also applied to the federal 6% GST (reduced from 7% July 1, 2006) ; therefore actually 7.95%.
  • Prince Edward Island 10% nominally, but is also applied to the federal 6% GST (reduced from 7% July 1, 2006); therefore actually 10.6%.

Which items the tax is applied to also varies widely by province.

[edit] Goods and Services Tax

Main Article: Goods and Services Tax (Canada)

Under Brian Mulroney's government in the early 1990s a federal sales tax, the Goods and Services Tax (GST) was introduced to replace the hidden 13.5% Manufacturers' Sales Tax (MST), a tax much despised by economists. Nevertheless, the GST caused much controversy when it was implemented, but today has become a crucial source of federal revenue. The rate is 6% (reduced from 7% July 1, 2006) and it is applied to a wide variety of items, many of which are exempt from provincial taxes. In Quebec and Prince Edward Island, the PST is also applied on top of the GST. Prime Minister Stephen Harper promised to reduce the GST to 6%, and then to 5% within 5 years. In a two year budget tabled in Parliament on May 2, 2006, the government introduced the first of two reductions to the GST to 6%, with an effective date of July 1, 2006. Bill C-13, which implemented that measure, received Royal Assent on June 22, 2006 (2006, c.4).

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