Bank of Canada chief pushes smarter provincial sales tax

David Dodge, the governor of the Bank of Canada and the current architect of our monetary policy, suggested the province of Ontario should revamp the provincial sales tax (PST) to more closely resemble the value-added federal GST in a rare appearance before the Commons industry committee.

The suggestion is a solid one, as it would allow producers some relief from their tax burden and still tax ultimate consumption by end users. The GST is an interesting tax in that producers deduct the GST they pay on inputs from the GST they collect on outputs, hence they are only taxed on the value they add to their product. Turning Ontario’s 8% PST into a value-added tax would help producers compete in the global economy.

One thought on “Bank of Canada chief pushes smarter provincial sales tax

  1. That certainly would be clever.

    Being just a kid when the whole free-trade/GST thing came about, I didn’t see a connection between them, but it makes more sense now that I’m older and have had a chance to read about it all – if you’re going to have imports from other countries, the sales tax is a clever way to gain revenue.

    Not that I like paying that tax one bit, but it’s comforting to know that at least there’s some logic at work.

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