GST (Goods and Services Tax)
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The GST Act (an Act to amend the Excise Tax Act, the Criminal Code, the Customs Act, the Customs Tariff, the Income Tax Act, the Statistics Act and the Tax Court of Canada)
Sponsor: Hon. William Kelly (ON)
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January 24, 1990 marked the beginning of a year-long struggle to manoeuver GST (Goods and Services Tax) through Parliament. The new 7% GST was designed to replace an existing 13.5% Manufacturers Sales Tax (MST). From a political perspective, the bill generated intense debate; from a policy perspective, GST had three advantages over its predecessor:
* Firstly, it equalized sales taxes across all goods and services sold
in Canada, regardless of country of origin, method of distribution
or end use;
* Secondly, it captured a new revenue base – services – which had
not been taxed previously but now represented 2/3 of total sales
in Canada; and
* Thirdly, it exempted exports, which facilitated free trade with the
US and other nations.
The government argued that GST was revenue neutral with MST and offered greater visibility, making it a fairer tax. Subsequent statistics proved government right about revenue neutrality. Increased transparency, on the other hand, gave rise to widespread, often passionate, resistance to the new tax. Between 75 and 85% of Canadians consistently told pollsters they opposed the GST, and editorial cartoonists had a heyday. Nevertheless, the bill eventually passed through Parliament and became the law of the land on January 1, 1991.
The GST saga makes for interesting reading. It spotlights the only time a Prime Minister ever appointed eight extra senators in order to forestall defeat on a government bill. And it marked a distinct shift toward Parliamentary impotence.
On October 8, 1990, Maclean's attempted to make sense of events in an article headlined How Much Can Canada Take? It concluded that "the unprecedented events left the GST's future no more certain than that of the Senate – or the country – itself." A year later, Senator Royce Frith (ON) was much less equivocal. When he published his lively day by day account of GST proceedings, Hoods on the Hill, he pronounced the following verdict:
…in our system the word government now means Prime Minister....
[T]he system of parliamentary democracy we originally chose for
Canada is not the system we have now. It has been transformed
by the concentration of power more and more in one person – and
so is subject to terrible abuse when, for example, that person has
the attitude and style of a bully and, of course, surrounds himself
with people of like mind.