The GST/HST: Creating an Integrated Sales Tax in a Federal Country

34 Pages Posted: 24 Jul 2012

See all articles by Richard M. Bird

Richard M. Bird

affiliation not provided to SSRN

Date Written: January 1, 2012


Canada is not a country with a reputation for bold experimentation. However, Canadian experience demonstrates conclusively that an invoice-credit, destination-based value-added tax (VAT) is workable at the subnational level, with both federal and provincial governments retaining full control over the rates of their sales taxes as well as retaining a surprising degree of policy freedom with respect to the base of the tax. As this paper shows against the background of a concise history of sales taxation in Canada, it has taken decades of federal-provincial negotiations to produce the present substantially integrated national and provincial sales tax system. Moreover, the process not yet complete and the results are far from perfect. Nonetheless, Canada has shown that not only can VATs be introduced at the subnational level but that they can work surprisingly well – at least in a country with an over-riding national VAT.

Keywords: Canada, VAT, subnational taxes, intergovernmental fiscal relations

JEL Classification: H25, H71, H77

Suggested Citation

Bird, Richard Miller, The GST/HST: Creating an Integrated Sales Tax in a Federal Country (January 1, 2012). Rotman School of Management Working Paper No. 2115620, Available at SSRN: or

Richard Miller Bird (Contact Author)

affiliation not provided to SSRN

No Address Available

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