GST Turns 30 Just as Canada’s Debt Hits $1 Trillion
December 31, 2020 aadolphGST
January 1 is the 30th Anniversary of GST!
The GST turns 30 on January 1st. Brought in to slay a $360 Billion debt that at the time seemed to be running away, the tax itself was a revamp of a tax on consumption that had its roots in Prohibition. GST has deeper roots than its younger Sibling, Income Tax.
The GST came into force in Canada on January 1, 1991, despite many protests. I remember making my 15 seconds of fame on the CKVU News Vancouver when one of their reporters had a cameraman climb a ladder to records the goings-on in the “secret new tax office”. I was talking on the phone to a caller-in.
A Brief History of Value Added Tax
The UK was one of the first countries with a value-added tax system, going back to the 70’s (early childhood memory for me).
Later, in the early 80’s, the world was shocked to hear how financially dire things were for New Zealand, terribly in debt and circling the drain, and about to start cannibalizing one-another. In 1984, New Zealand enacted a GST system just like VAT in the UK. (Dates are approximate please).
In 1986, Expo comes to Vancouver. It was the last time I remember the world having a great party environment. In 1987, reports come in about how New Zealand turned itself around. By 1988, Canada had spent a lot on infrastructure, including the Expo 86 debt, and was not only in never-before dep debt, but it was running away-type debt.
Could what worked for New Zealand work for Canada?
On January 1, 1991, Canada enacted the Goods and Service Tax Act. It became my career. 24 years on the inside, and six years on the outside.
Canada’s debt the day GST came into being, January 1, 1991, was $363 Billion.
Canada’s estimated debt as of this blog being posted: $1.007 Trillion.
Courtesy to the Canadian Taxpayers Federation.
Future of GST in British Columbia
GST is a much more business-friendly tax than the BC PST. The PST system makes major capital purchases too expensive, except for certain industries who receive exemptions. They PST system is also very demanding and requires tax returns every month no matter the size of the company.
Understanding Sales Tax is Difficult
Despite our admiration for the GST as a well-designed consumption tax, we also know how complicated it can be. That is why we offer a free 30 minute phone call with someone you can talk to about your situation. We love to help, especially with new businesses starting up.
Happy New Year 2021 !!!
Andrew Adolph is a CPA and former CRA auditor with 25 Years of experience. He helps businesses to not par any more in sales taxs than the law says they must and acts as an advocate for you if you are being audited, so you can fous on your business.