What is GST?
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Goods and Services Tax.
A tax upon a tax upon a tax upon a tax.
Petey
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Goods and Services Tax.
A tax upon a tax upon a tax upon a tax.
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It may be that in other countries, but not in Canada. Every seller of taxable goods (e.g. raw cotton) sells his goods with the 7% tax added on top of the selling price. If the buyer uses those goods to further process them into something else (fabric), then he gets the tax he paid on the raw cotton back. If he then sells the fabric he made to someone, the fabric buyer is entitled to the same tax relief if they further process the fabric into curtains and then sells those curtains.
The goods must be materially changed, so adding a label does not qualify as further processing. The individual who buys the finished product pays the tax and gets no relief. It’s the purest definition of a value-added tax and there are final consumer exemptions for basic foods, some services (e.g. financial), and some finished products (e.g. books, children’s clothing). A seller who has less than $30,000 in sales in a year is also exempt from having to charge the tax to whoever purchases their final product. So if the Amish bought fabric, they’d get the tax on the fabric back and wouldn’t have to charge the tax to their clothing buyers if their sales stayed under $30,000.
There is no good tax, but a value-added tax is better than some.