shared tax

Goods & Service Tax

Goods & service tax ( GST) is an indirect tax imposed on the supply of goods or services in Canada. It is a value–added tax (VAT) that applies on almost all goods and services at the federal level. Some goods and services, including but not limited to groceries, prescription drugs, and residential rent, are exempt from the taxation. The GST is administered by the Canada Revenue Agency (CRA) and collected by the Receiver General for Canada.

The goods and services tax was first implemented in 1991 and replaced the previous goods & services tax structure called the Manufacturers Sales Tax (MST). MST was a tax levied on goods produced within Canada, which only applied when goods were manufactured in the country and imported from other countries. GST was seen as more efficient than MST due to its broad base and applicability to goods and services consumed in Canada, regardless of origin.

The GST operated in a similar fashion to the GST in Australia, New Zealand, and many European countries. It is a multi-stage tax, meaning that each stage of the supply chain does not pay the same amount of tax. For example, when a manufacturer produces goods in Canada, they pay a GST. When the manufacturer sells the goods, the retailer then pays the GST, but not the same amount that was previously paid.

The GST rate is currently 5% and is the same across all provinces and territories in Canada, with some provinces levying an additional provincial sales tax (PST) on certain goods or services. For example, in Ontario and British Columbia, an additional 8% PST is levied on goods or services such as restaurant meals, while in Alberta, a 5% GST (with no additional PST) applies to most goods or services.

GST has allowed for higher quality goods & services to be made available to Canadians as it encourages businesses to be competitive in their pricing and to innovate in order to remain profitable. It has also increased the Federal governments revenue which helps to cover areas of deficit spending. As GST is an indirect tax, it acts on consumption rather than income and therefore is seen as a more equitable taxation system that does not disproportionately burden lower-income groups.

In addition, the GST has also allowed for the opening of international borders leading to an increase in trade. This has been beneficial for consumers as it has allowed for cheaper goods to be imported from other countries, reducing prices for goods and services.

Since the implementation of GST in 1991, the GST rate has been adjusted twice, with a small reduction in the rate in 2006 and a large reduction in the rate in 2008. The current GST rate is 5%.

Ultimately, GST has been beneficial for Canadians by helping to lower the cost of goods & services, encouraging economic growth, and providing a more equitable taxation system. It has been successful in increasing government revenue while not punishing lower-income individuals. GST is an important part of a successful economy and has proven to be a successful source of revenue for the Canadian government.

Shared taxes are taxes that are shared equally between two or more levels of government, as opposed to being exclusively paid by the lower level to the higher. Shared tax revenues can come from both direct and indirect taxes. Direct taxes are those collected directly from individuals and businesses, while indirect taxes are taxes collected on transactions such as sales, value added and excise.

Tax sharing can be voluntary or mandated. Voluntary tax sharing is when an agreement has been reached between the two levels of government to share equally in all tax revenues. This is usually seen in federal systems, where both federal and state governments collect taxes and divide the revenue equally. Mandatory tax sharing is when a single government mandate applies to all members of the same government; again, this is often seen in federal systems, where the government has agreed to share in the revenue from each of its members.

Shared taxes help to create a fairer and more equitable distribution of resources. It prevents one level of government from benefitting disproportionately from certain taxation. This essentially helps to ensure that all levels of government are accountable for their revenue collection and expenditure. In addition, shared taxes can help to ensure that local governments receive the revenue they need to adequately provide necessary services to their citizens.

For example, in the United States, revenue from the federal income tax is shared between the federal government and the states. This revenue sharing helps to ensure that all of the states receive an equal amount of revenue regardless of their size or population. As another example, the government of India has mandated the sharing of all taxes between the centre and the states. This has helped to ensure that all states receive an equitable and fair share of the nations revenue.

Shared taxes can be a highly effective way of ensuring fairness and equity in a multi-tiered system of government. It can also help to ensure that local governments have sufficient revenue to adequately provide services to their citizens.