Why is tax not included in prices of goods and services in Canada ?

Question

It seams to me that it is only in Canada and in the USA that taxes are added at the cash register. Would nt it be easier to include them in the price like everywhere else ?

Answer 1

No definite answers, but here are some suggestions:
Tax is not included because the businesses are required to remit their taxes collected based on their sales. By charging the taxes at the register the transactions are transparent and it is easy from an audit point of view to ensure that the proper amount of tax is remitted by the business owner.

If taxes were included and prices were to go up, the amount of work involved to recalculate taxes would be excessive. By not including the taxes it is easier to change prices, provide discounts, etc.

Businesses who remit tax also need to pay tax on items they purchase. For example, the gun shop might charge you $3 in GST on your new ammo, but pay $34 in GST to advertise the ammo sale and $95 in GST for their utilities. At the end of the month, total GST charged and total GST remitted are both used to calculate the net GST they have to fork over.

It makes you feel warm and fuzzy to know exactly how much tax you paid - look at a fuel receipt in Canada, where the GST is included in the price of fuel. There's a little message with a smiley face saying "$2.17 GST included in price of fuel."

These are all just suggestions. Food for thought, really.

I hope this helps.

Answer 2

I honestly tried looking into it, and in order to understand, you pretty much have to be a financial expert in the tax system and the way the government makes money, how business operate and they pay taxes, retailer pay taxes, and finally the consumer. Don't forget to include the provinces somewhere in this picture.

Here is a little sample from the pages of Department of Finance Canada: This little section might help you a bit with your question, as to understand why the prices aren't included in the final product price. (To best understand why it isn't added, best to just go directly to the Department of Finance Canada webpage where they talk about all of this)


Value-added taxes largely eliminate the hidden taxes on business inputs (i.e. the items that businesses buy in order to make their products, deliver their services, and keep their businesses running), which increase consumer prices for many goods.

Replacing the current federal and provincial sales taxes with a harmonized value-added tax will:

remove distortions which increase the price of certain goods;
reduce compliance costs, thereby contributing to lower prices; and
make both the final price of a good or service and the total sales tax applied to that good or service more transparent.

Answer 3

I don't know. Never really thought about it. I've always just known that when I see something I want, I'm going to have to pay a little extra on top of the list price. It's just normal...

Answer 4

Because they smoke you in all other forms of taxes. Frickin socialists

Answer 5

Because they are considered needed and that people cannot live without them.