Lessons in Harmony: What Experience in the Atlantic Provinces Shows About the Benefits of a Harmonized Sales Tax

Abstract

Provincial retail sales taxes are remarkably high on business inputs, including purchases of capital goods that spur growth in productivity and employment. Evidence from Eastern provinces with a Harmonized Sales Tax (HST) suggests that harmonizing provincial sales taxes with the federal GST would eliminate most of this distortion, without leading to an increase in consumer prices.tax reform, retail sales taxes