Harmonize Consumption Taxes to Improve Economic Efficiency

In this briefing, Signal49 Research argues in favour of a harmonized tax system. The current situation of having tax regimes operating at cross purposes across the country undermines incentives, acts as a drag on productivity, and adds costs to businesses. A concrete way to improve the efficiency of the tax system would be through harmonization of consumption taxes into a single value-added tax system. Specifically, provinces that have a consumption or sales tax should work with the federal government to harmonize their retail sales tax regimes with the federal GST in order to create a harmonized value-added consumption tax system—ideally at a single rate. Such a system would reduce business costs and provide a welcome and necessary boost to Canadian productivity growth.