Policy Forum: Canada's GST and Financial Services--Where Are We Now and Where Could We Be?

Abstract

The treatment of financial services remains the last unconquered frontier in the design of a value-added tax (VAT)/goods and services tax (GST). Like the vast majority of its VAT/GST peers, Canada exempts most financial services under the GST. The author reviews the legal landscape surrounding this treatment as well as the economic issues it raises. He finds that the current treatment is deeply unsatisfactory from many angles. He then reviews the international experience with the Canadian experience in mind and concludes that the South African model would be the best alternative for Canada.