Get ready for a long grumble if you talk to anyone in Canada about sales tax! Its visibility on our receipts makes it the brunt of our loudest tax complaining. Since 2008 when the federal Goods and Services Tax (GST) replaced an invisible manufacturer’s tax, the rates and the ways it’s been applied have wavered wildly.
One Canadian province and the three northern territories have only the 5% GST. The other 9 provinces set their own rate in addition to the federal 5. Mine, Nova Scotia, has the highest combined rate at 15%.
For comparison purposes, there is no US federal sales tax. Five states have no state sales tax and the highest US rate is 9-point-something in Tennessee. The UK has a value-added tax of 20% on most consumer goods, but by law, it is incorporated in the sticker price. It’s the same in Australia at 10%.
Let’s look at buying a non-essential consumer item like an unlocked, 32GB iPhone 5S…shall we? All prices include free shipping to a home in the area mentioned:
Halifax NS, Canada via apple.ca
$819 plus 15% tax ($122.85) = $941.85 CDN
Boston MA, USA via apple.com
$749 plus 6.25% state sales tax ($46.81) = $795.81 US
$896.48 CDN of which $52.73 would be tax
London UK via apple.com/uk
£629 includes £104.83 VAT = £629
$1175.92 CDN of which $195.98 would be tax
Sydney AUS via apple.com/au
$999 includes $90.82 VAT = $999 AUS
$1059.54 CDN of which $96.32 would be tax
A new-model iPhone is a luxury product no matter where you are, but these prices show how much money the government gets from your purchase. Is anyone else thinking of the Boston Tea Party? 🙂
Just for fun (you know me), I wanted to find out how much I pay in sales tax. Since the timing is right, I looked at the first quarter of 2014.
So I spent $7628 in the first 3 months of the year (oy!)
25% of that was on non-taxable items:
- Basic groceries
- Charitable donations
- Household water service
- Dental care
- Health care
- Bank charges (minimal)
Home heating and electricity have only the 5% GST, so they generated $53 for the government.
I paid 15% sales tax on all the rest (from highest to lowest cost):
- Air fares and room deposit for upcoming Toronto trip
- Furnace repair
- Cable TV, Internet, land line and cell phone bills
- Gas for car
- Dining out (restaurants, cafes and take-out)
- Snacks and café treats (candy, chips, ice cream)
- Reimbursed job expenses
- Personal care items (shampoo, toothpaste, etc.)
- Taxable groceries (juice, cookies)
- Skating helmet
- Skating and skate sharpening
- Windshield wipers for car
- Bridge tolls
- 2 DVDs
- Cat food
- Paper goods (tissues, toilet paper)
- Hair cuts
- Cookware (food storage containers)
- Printer ink
- Movie tickets
- Cleaning supplies (dish detergent, garbage bags)
- Ice melt for the driveway
All of which generated $595 for my province. (And now you know everything I bought for the past 3 months!)
Well, the provinces are responsible for services like health, education, energy, economic development and local infrastructure. Provinces get their income from federal transfer payments, income tax, business tax, sales tax, fuel tax, tobacco and alcohol tax, lottery tickets, and vehicle permits.
The more you spend, the more sales tax you pay – it’s related to your level of consumption. Basic goods and services such as rent and groceries are not taxed, which benefits people on low incomes who spend more of their income on essentials. They’re also eligible for a GST rebate of about $260 a year, no receipts required. Businesses don’t have to collect and remit sales tax until their annual revenue is over $30,000. I never thought I would say this, but the sales tax system seems quite fair to me.
But I still get sticker shock when Rom and I go out to dinner and there’s $6.75 tax on a $45 meal. Or the $20 sweater I bought rings up as $23. I would prefer the all-in price like they mandate in the UK and Australia.
What is your sales tax situation? Do you rail against it or grin and bear it?