Sales tax in Alberta

Sales tax in Alberta consists only of a federal consumption tax, the Goods and Services Tax (GST).

Alberta is the only province in Canada without a provincial sales tax (PST).

History

Prior to in 1936, existing legislation taxed specific goods and services like furs, amusements, coal, electricity, pipelines, and more.[1] On April 1, 1936, Alberta became the first, and only, provincial government in Canada's history to default on a debt payment.[2] This default resulted in Premier William Aberhart's government passing The Ultimate Purchasers Tax Act[3] which introduced the first general sales tax in Alberta. The Act created a 2% tax on sales of all goods, with a few exceptions, effective May 1, 1936.[4] Minor changes were made later in 1936 as The Ultimate Purchasers Tax Act was repealed by The Retail Sales Tax Act, 1936.[5]

In 1937, Aberhart's government passed An Act to amend The Ultimate Purchasers Tax Act[6] which amended The Ultimate Purchasers Tax Act to allow the Lieutenant Governor in Council to suspend the tax indefinitely.[7] Aberhart's government chose to suspend the tax indefinitely effective August 1, 1937 due to public backlash. The suspension of the tax became even more feasible when succession duty from the estate of Patrick Burns resulted in a nearly $1,000,000 tax payment (roughly equivalent to $20,400,000 in 2023), which was approximately equal to the sales tax revenue raised in 1937.[8][2]: 202–204 

In succeeding years, a growing oil industry in Alberta allowed future governments to avoid sales taxes and even post budget surpluses.[1]

Federal sales tax

On January 1, 1991 Prime Minister Brian Mulroney's government introduced the first general federal sales tax, the Goods and Services Tax (GST), at 7%. The GST replaced the hidden 13.5% manufacturers' sales tax (MST).[9]: 7–8 

On 1 July 2006, Prime Minister Stephen Harper's government reduced the general federal sales tax (GST) to 6%, and on 1 January 2008, Harper's government further reduced the GST to 5%.

Referendum requirement

In 1995, Ralph Klein's government introduced the Alberta Taxpayer Protection Act[10] which legislated any general provincial sales tax be subject to a referendum.[11] The legislation that prevents the introduction of a sales tax without a referendum was expanded in 2023 by UCP Premier Danielle Smith to include increases to personal and corporate tax rates.[12] [13]

See also

References

  1. ^ a b Finch, David (20 May 2016). "Why Alberta deserves a provincial sales tax". The Globe and Mail.
  2. ^ a b Hanson, Eric. Eric J. Hanson's financial history of Alberta, 1905-1950.
  3. ^ The Ultimate Purchasers Tax Act
  4. ^ "The Ultimate Purchasers Tax Act" (PDF).
  5. ^ "The Retail Sales Tax Act" (PDF).
  6. ^ An Act to amend The Ultimate Purchasers Tax Act
  7. ^ "An Act to amend The Ultimate Purchasers Tax Act" (PDF).
  8. ^ Pat Burns, cattle king. 1979. ISBN 9780888330109.
  9. ^ Bird, Richard (April 2012). "The GST/HST: Creating an Integrated Sales Tax in a Federal Country". International Center for Public Policy, Georgia State University.
  10. ^ Alberta Taxpayer Protection Act
  11. ^ ALBERTA TAXPAYER PROTECTION ACT (PDF).
  12. ^ Weber, Bob (30 October 2023). "Alberta throne speed promises referendum on new taxes, makes no mention of leaving CPP". National Post. The Canadian Press.
  13. ^ "Bill 1: Alberta Taxpayer Protection Amendment Act, 2023" (PDF). The Legislative Assembly of Alberta, First Session, 31st Legislature, 2 Charles III.