Canada’s 9% Sales Tax Proposal Stirs Discontent

The Canadian government’s plan for a 9% sales tax is bringing more than the usual number of protests from the grassroots. Some analysts say the tax could cause tremendous upheaval in the economy.

“There has to be a better solution,” said Gus Karagianis, who has a placard outside his Fruit King produce stand inviting passers-by to sign a tax-revolt petition.

He showed off about 3,200 signatures he said he had gathered in three weeks.

“Being a store owner I’m capable of voicing my opinion,” he said. “Regardless of whether it does any good or not, just voice your opinion.”

Petitions, some of them sponsored by newspapers, telephone hot lines, the inevitable slogan T-shirts and buttons and even a tax protest song have sprung up since Finance Minister Michael Wilson announced the details in August of the proposed goods and services tax that would take effect in 1991.

The tax would replace an existing, hidden 13.5% manufacturers sales tax that the government says damages the Canadian economy’s ability to compete. The current tax, for example, applies only to goods manufactured domestically and not to imports.

Wilson said the new tax would be “revenue neutral” for the government as compared to the current system but would raise the consumer price index by 2.25% in 1991.

The new tax would be felt by consumers for many goods and services not now covered, from new houses to restaurant meals and even postage stamps.

Basic groceries, virtually all of the items sold in Karagianis’ store, would not be affected, but the 33-year-old shopkeeper said he believes that any measure that cuts into consumers’ spending power ultimately hurts his business.

“You can only tighten the belt so much,” he said.

Basic groceries, prescription drugs, health and dental care, educational services, day care and legal aid would be among the few categories left untouched by the new tax.

The Edmonton Sun newspaper in the Western province of Alberta said it has gathered from readers more than 15,000 tax-protest coupons addressed to Wilson. “There are a number of individuals and organizations who started petitions,” Managing Editor Randy McDonald said. “It’s been more of a grass-roots thing.”

Taxes traditionally have been higher in Canada than in the United States.

McDonald said tax freedom day, when citizens can stop thinking that their money is going to the government, already is calculated for Albertans as July 15 or 16. It was May 4 this year in the United States.

“I think it’s just a matter of enough’s enough,” McDonald said.

The Toronto Sun, the Edmonton’s Sun’s sister newspaper in Canada’s largest city, said it has taken in 138,000 tax-protest coupons so far.

No central place has tabulated the number of Canadians signing petitions or expressing opposition to the tax plan in other ways.

But critics of the plan say they hope that evidence of widespread, visible discontent will persuade the government to alter or scrap the plan. They note that it won’t take effect until 1991, when the next national election will be on the horizon and unpopular measures might be harder to take.

Prime Minister Brian Mulroney’s Progressive Conservative Party is in the first year of its second consecutive majority term. Another election will not have to be called for at least three years.

“We are bringing in the new goods and services tax not because it is easy but because it is right,” Mulroney told his party’s recent convention.