- For a detailed history of sales tax reforms in Canada as well as support for this assertion, see Richard M Bird and Pierre-Pascal Gendron, ‘Sales Taxes in Canada: The GST-HST-QST-RST “System”’ (2010) 63 Tax Law Review 517.
- The discussion of efficiency and equity in this section draws on Neil E Bass and Pierre-Pascal Gendron, ‘Sales Taxation’ in Heather Kerr, Ken McKenzie and Jack Mintz (eds), Tax Policy in Canada (Canadian Tax Foundation, 2012) 8:1–8:41.
- See Gareth D Myles, Public Economics (Cambridge University Press, 1995) 127.
- See further discussion of this case in Bass and Gendron (n 2) 8:8.
- See eg James B Davies, France St Hilaire and John Whalley, ‘Some Calculations of Lifetime Tax Incidence’ (1984) 74 American Economic Review 633.
- See Richard M Bird and Pierre-Pascal Gendron, The VAT in Developing and Transitional Countries (Cambridge University Press, 2011 [2007]) 70–80; Sijbren Cnossen, ‘Impact of Consumption Taxes’ in Sijbren Cnossen (ed), Excise Tax Policy and Administration in Southern African Countries (UNISA Press, 2006) 151; Liam Ebrill, Michael Keen, Jean-Paul Bodin and Victoria Summers, The Modern VAT (International Monetary Fund, 2001) 105–12.
- See the extensive discussion including examples throughout Bird and Gendron (n 6).
- This section draws on Bass and Gendron (n 2) 8:15–8:20.
- The legislative provisions governing the GST (and, indirectly, the HST) are contained in the Excise Tax Act, RSC 1985, c E-15, as amended (hereinafter referred to as ‘the ETA’).
- For an illuminating discussion of this fascinating and highly unusual turn of events, see the articles in ‘Policy Forum’ (2012) 60 Canadian Tax Journal 101.
- Robert D Brown and Jack Mintz, ‘The Big Picture’ in Kerr et al (n 2) 1:15.
- The discussion in this subsection focuses on exempting and similar provisions only and draws in part on Bass and Gendron (n 2) 8:26–8: 33.
- Excise Tax Act (n 9), sch VI.
- Additional descriptions are from Canada Revenue Agency, General Information for GST/HST Registrants (Government of Canada, 2010) 9, www.cra-arc.gc.ca/E/pub/gp/rc4022/rc4022–12–10e.pdf. All websites accessed August 2012.
- For a plain language description of import and export rules, see Canada Revenue Agency, ibid, 48.
- Excise Tax Act(n 9), sch VI.
- See n 14.
- The real property sector is subject to complex special rules whose description lies beyond the scope of this article. For details, see Benjamin Alarie and Pierre-Pascal Gendron, ‘Canada’ in Robert van Brederode (ed), Immovable Property under a VAT: A Comparative Global Analysis (Kluwer Law International, 2011) 83–121.
- Those two rebate programs are much more complex than the text suggests. For details, see Canada Revenue Agency, GST/HST New Housing Rebate (Government of Canada, 2012), www.cra-arc.gc.ca/E/pub/gp/rc4028/rc4028–12e.pdf; Canada Revenue Agency, GST/HST New Residential Rental Property Rebate (Government of Canada, 2012), www.cra-arc.gc.ca/E/pub/gp/rc4231/rc4231–12e.pdf.
- This rebate program is again much more complex than the text suggests. For a thorough analysis, including an explanation of the various rebate rates, see Pierre-Pascal Gendron, ‘VAT Treatment of Public Sector Bodies: The Canadian Model' in Rita de la Feria (ed), VAT Exemptions: Consequences and Design Alternatives (Kluwer Law International, forthcoming 2013).
- See eg Michel Aujean, ‘Commentary’ (2010) 63 Tax Law Review 509.
- Christopher Heady, ‘Tax Expenditures: Definitional and Policy Issues’ in Lisa Phillips, Neil Brooks and Jinyan Li (eds), Tax Expenditures: State of the Art (Canadian Tax Foundation, 2011) 2:2.
- ibid, 2:10–2:14.
- See for example, the articles in ‘Economic Analysis of Tax Expenditures' (2011) 64 National Tax Journal 451.
- Tax expenditures are the object of debates which cannot be discussed here due to space limitations. See the contributions throughout Phillips, Brooks and Li (n 22).
- The first such contribution in recent years was Richard M Bird, ‘The GST in Canada: plus ça change, plus c'est la même chose?’ (2009) 63 Bulletin for International Taxation 414. This was followed by Bass and Gendron (n 2) 8:40–8:41, which focused on the particular cases of basic groceries and other goods, and the threshold; and Michael Smart, ‘Departures from Neutrality in Canada's Goods and Services Tax' (2012) 5 SPP Research Papers (School of Public Policy, University of Calgary), http://policyschool.ucalgary.ca/sites/default/files/research/m-smart-gst-012.pdf.
- In Canada this includes, for example: Canada Department of Finance, Tax Expenditures and Evaluations 2011 (Government of Canada, 2012), www.fin.gc.ca/taxexp-depfisc/2011/taxexp11-eng.pdf; and Finances Québec, Dépenses fiscales edition 2011 (Gouvernement du Québec, 2012), www.finances.gouv.qc.ca/documents/autres/fr/AUTFR_DepensesFiscales2011.pdf.
- Bird (n 26).
- Smart (n 26).
- Data from Canada Department of Finance (n 27).
- Smart (n 26) 4.
- As of 15 August 2012, the EUR/CAD exchange rate was 1.2153. Source: Pacific Exchange Rate Service, http://fx.sauder.ubc.ca.
- Bank of Canada, ‘Historical Data: Inflation’, www.bankofcanada.ca/rates/indicators/capacity-and-inflation-pressures/inflation/historical-data; and author's calculations.
- Canada Department of Finance, Jobs Growth and Long-Term Prosperity: Economic Action Plan 2012 (Government of Canada, 2012) 240, www.budget.gc.ca/2012/plan/pdf/Plan2012-eng.pdf.
- For example: Ebrill et al (n 6); Bird and Gendron (n 6).
- The key assessments and proposals were previously expressed in Pierre-Pascal Gendron, ‘A Fresh Look at the GST at Twenty-One’, presentation delivered at the 46th Annual Conference of the Canadian Economics Association, University of Calgary, Canada, 8 June 2012.
- Over the period ranging from 2000 to 2006 inclusive, 506 GST cases were processed by the Tax Court of Canada (TCC)—out of a total caseload of 4,397 cases, a proportion of 12%. Of those 506 cases, 442 or 87% were appeals. At current revenue figures, GST cases would be slightly underrepresented relative to the ratio of GST revenue to total tax revenue. On the other hand, the very high proportion of GST appeals suggests that litigation is a major problem. I thank Professor Benjamin Alarie of the Faculty of Law, University of Toronto, for providing me with the raw data which allowed me to make the aforementioned calculations. An investigation and analysis of data by specific GST issue is beyond the scope of this article and left for future research.
- Space limitations preclude further discussion of the GST/HST credit. For technical details, see Canada Revenue Agency, GST/HST Credit (Government of Canada, 2012), www.cra-arc.gc.ca/E/pub/tg/rc4210/rc4210–12e.pdf.
- See tabulations in Smart (n 26) 16 and the survey in Cnossen (n 6).
- See Luc Godbout and Suzie St Cerny, ‘Are Consumption Taxes Regressive in Quebec?’ (2011) 59 Canadian Tax Journal 463; Smart (n 26) 15–17. Government analyses also support this conclusion: see Canada Department of Finance (n 27) 43.
- Bird (n 26) 417.
- For an absurd example of such problems in the case of pasties, see Judith Evans, ‘UK Retreats from “Shambolic” Hot Food Tax' National Post (Toronto), 30 May 2012, A16.
- This is in line with proposals in Godbout and St Cerny (n 40), Smart (n 26), and Bass and Gendron (n 2).
- See Smart (n 26) 17 for a calculated effective GST rate of 3.5% on new housing.
- Satya Poddar, ‘Taxation of Housing under a VAT’ (2010) 63 Tax Law Review 443, 452.
- For a contrary point of view see George Fallis, ‘Tax Expenditures and Policy: A Case Study of Housing Policy in Canada’ in Phillips, Brooks and Li (n 22) 10:1–10:26.
- This in line with the proposal in Smart (n 26), who does not, however, suggest a length for the transition period for the elimination of the new housing rebate.
- Bird and Gendron (n 6) 115–20; Ebrill et al (n 6) 113–24.
- The basis for the proposal was set out in Bass and Gendron (n 2) 8:41.
- See Michel Aujean, Peter Jenkins and Satya Poddar, ‘A New Approach to Public Sector Bodies’ (1999) 10 International VAT Monitor 144.
- See Gendron (n 20).
- This view and proposals to that effect, as well as the remainder of this subsection, draw on: Pierre-Pascal Gendron, ‘VAT Treatment of Nonprofits and Public Sector Entities' in Robert Goulder (ed), The VAT Reader: What a Federal Consumption Tax would Mean for America (Tax Analysts, 2011) 239, www.taxanalysts.com/www/freefiles.nsf/Files/VATReader.pdf/$file/VATReader.pdf; Pierre-Pascal Gendron, ‘How Should the United States Treat Government Entities, Nonprofit Organizations and other Tax-Exempt Bodies under a VAT?’ (2010) 63 Tax Law Review 477; Aujean (n 21).
- See Bird and Gendron (n 1) 543 and the references therein.
- This can be seen by examining the instances of the public service bodies base (PSBBASE) in the revenue allocation formulae presented in Ontario Ministry of Finance, Comprehensive Integrated Tax Coordination Agreement between the Government of Canada and the Government of Ontario (Government of Ontario, 2009) 25, www.fin.gov.on.ca/en/publications/2009/citca.pdf.
- This is in line with the proposal in Smart (n 26). It should be noted that recent work on the EU VAT treatment of public sector bodies has arrived at the conclusion that full taxation should be considered. See Gendron (n 20) and the references cited therein.
- Statistics Canada, ‘Gross Domestic Product at Basic Prices, Finance and Services', www.statcan.gc.ca/tables-tableaux/sum-som/l01/cst01/fin06-eng.htm; Statistics Canada, ‘Gross Domestic Product, Expenditure-Based’, www.statcan.gc.ca/tables-tableaux/sum-som/l01/cst01/fin06-eng.htm; and author's calculations.
- For two recent but very different surveys, see: Alan Schenk, ‘Taxation of Financial Services (Including Insurance) under a US Value-Added Tax' (2010) 63 Tax Law Review 406; and Pierre-Pascal Gendron, ‘VAT Treatment of Financial Services: Assessment and Policy Proposals for Developing Countries' (2008) 62 Bulletin for International Taxation 494.
- See Schenk, ibid, 424–8.
- Alan Schenk and Oliver Oldman, Value Added Tax: A Comparative Approach (Cambridge University Press, 2007) 337.
- The discussion in this paragraph draws on Bass and Gendron (n 2) 8:29–8:31. See also the reference to a recent Federal Court of Appeal case therein.
World Journal of VAT/GST Law
Volume 1, 2012 - Issue 2