Options for the Goods and Services Tax

The Liberal commitment to replace the goods and services tax (GST) with a better tax has been studied by the House of Commons Finance Committee. The question of alternatives to the GST is not a new one. Prior to its introduction in 1991, a minority of tax experts questioned the wisdom of the federal government’s determination to go ahead with the GST.1 Some developed detailed proposals that would have resulted in the elimination of the much-maligned manufacturers’ sales tax (MST) without introducing the GST. The arguments against the GST focused on the problems resulting from the enactment of the tax. These issues have not been resolved. An exploration of alternative approaches to consumption taxation is therefore warranted. In this article, we discuss reasons for either significant reform or replacement of the GST. We also outline a number of options.