Goods and Services Tax

"On August 8, 1989, the Minister of Finance released a technical paper which sets out many of the details of a proposed 9% federal value-added tax to be called the ""Goods and Services Tax"". The GST, which is scheduled to be implemented with effect from January 1, 1991, will affect all Canadians in different ways and to varying degrees. The mining industry itself should, by and large, benefit from the new tax.IntroductionOn January 1, 1991, it is proposed that the existing federal sales tax will be replaced by a new sales tax - the Goods and Services Tax (GST). GST will be leviedat a rate of 9% on most goods and services consumed in Canada.How it will WorkThe GST will be a tax on the final consumption of goods and services. It differs from a retail sales tax in that it will be collected throughout the production and distribution chain. However, the net effect of the tax paid on a particular good or service will be equivalent. The example above (next column) illustrates the application of the GST to the production and sale of a chair.Illustration of GST for a ChairEssentially, the total tax will equal 9% of the sale price to the final consumer. However, GST will be collected on the value added at each stage of the production and distribution chain . What will be TaxedVirtually all goods and services will be taxed. Items on which GST will not be charged fall into two categories: tax free and tax exempt."