Ottawa, April 15, 2009
Archived - A Simple, Modern and Efficient Value-Added Tax System in Canada—Column by the Minister of Finance
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The following text by the Honourable Jim Flaherty, Minister of Finance, was submitted to Montréal's La Presse and The Gazette newspapers for inclusion in their April 15 editions.
"You have likely read a lot in the past few weeks about the harmonization of sales taxes you pay – the GST and QST. While not the most exciting issue or the easiest one to understand, it's an important one for both our economy and jobs.
"Recently, the Quebec government acknowledged that the provincial sales tax was not fully harmonized with the GST – and that they may now want to adopt the same harmonization model that Ontario had just agreed to. Quebec's decision to consider adopting this harmonization model is a positive sign for a simpler and better tax system.
"Why has Ontario – as Nova Scotia, Newfoundland and Labrador, and New Brunswick had before – decided to move to the harmonized model? They harmonized because it is good for businesses, reducing their tax burden. Ontario's decision to harmonize will result, for instance, in approximately $5 billion less in taxes paid annually by businesses on their inputs – a stimulus to the economy at a time when it is necessary. This will contribute to making businesses more competitive, allowing them to boost investments and create jobs.
"The Quebec government has already recognized that this is the smart thing to do in principle when they chose to adopt a somewhat similar, but different, value-added tax model in the '90s. Premier Charest's government has now indicated that it may be prepared to take the next step forward and adopt the full harmonized model – and our Government is ready to work with them to make that happen.
"For Quebeckers and Quebec businesses, adopting the exact same agreement that Ontario agreed to would mean the harmonized tax would be legislated and administered federally. The federal legislation would spell out the items and services on which the tax is paid, and the exemptions associated with it as well. This is a uniform set of rules that would apply across the country, as it currently applies in other harmonized jurisdictions. It is a fair and consistent approach to all provinces.
"Under this uniform set of rules, the tax base would essentially mirror the GST base, with the provincial portion of the tax not applying to the GST.
"Businesses collecting the HST would deal with only one tax administration regardless of where they do business with no unnecessary layers of bureaucracy. This would lower costs for governments and taxpayers.
"This is the consistent and fair harmonization model that exists in harmonized provinces, which the Charest government can choose to join. It is the model that Ontario chose in their recent budget, and under which other provinces have successfully operated for many years.
"A single harmonized model for businesses in Quebec and in other provinces would be good for the Canadian economy as a whole – more investment, more growth, and more jobs."
For further information, media may contact:
Office of the Minister of Finance
Department of Finance
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