Harmonized Sales Tax - 1997 Implementation

1997 Implementation

In 1996, three of the four Atlantic provinces — New Brunswick, Newfoundland and Labrador, and Nova Scotia — entered into an agreement with the Government of Canada to implement what was initially termed the Blended Sales Tax (renamed to Harmonized Sales Tax) which would combine the 7% federal GST with the provincial sales taxes of those provinces; as part of this project, the PST portion of the new HST in these provinces dropped from 10% to 8%. The result was a 15% combined tax when the federal GST was added. The new tax for these provinces went into effect on 1 April 1997.

The HST is collected by the Canada Revenue Agency, which then remits the appropriate amounts to the participating provinces. On 1 July 2006, the Government of Canada reduced the GST nationwide to 6%, resulting in a combined HST for Nova Scotia, New Brunswick and Newfoundland and Labrador of 14%. The GST was again lowered nationwide on 1 January 2008 to its current rate of 5%, resulting in a combined HST in Nova Scotia, New Brunswick and Newfoundland and Labrador of 13%. On 6 April 2010, the Nova Scotia government raised the provincial portion of the HST to 10%, restoring the overall rate in that province to 15% effective 1 July 2010 as part of deficit fighting measures. On 2 April 2012 the premier indicated that the provincial government was planning to decrease the HST back to 13% by 2015.

Subsequent studies have been equivocal as to the success of this implementation for these provinces' economies and their consumers.