News release

Minister Cauchon releases study of the impact of the Harmonized Sales Tax on business compliance costs

Ottawa, October 7, 1999...The Honourable Martin Cauchon, Minister of National Revenue and Secretary of State responsible for the Economic Development Agency of Canada for the Regions of Quebec, today released a study on the impact of the implementation of the harmonized sales tax (HST) on business compliance costs in three Atlantic provinces.

"The findings of the study indicate that a strong majority of business retailers favour the current simplified, consolidated sales tax system over the previous, two-tier system," said Mr. Cauchon. "Survey respondents see many advantages and few disadvantages to the new system in terms of compliance requirements."

The survey findings were drawn from telephone interviews with 500 small and medium-sized retail businesses operating in Nova Scotia, New Brunswick and Newfoundland, where the HST was implemented April 1, 1997, replacing the previously separate provincial retail sales tax (PST) and the goods and services tax (GST).

Administrative changes resulting from the implementation of the HST are seen as favourable and worthwhile. Among those surveyed, 83% say they are more satisfied under the HST than they were under the former system, 15% are equally satisfied, and only 2% are less satisfied.

An earlier study, before the implementation of the HST in the three Atlantic provinces, estimated that business compliance costs under the former provincial sales tax ranged between $60 million and $100 million in 1995/96. Since the PST no longer exists as a separate tax, it no longer entails these compliance costs. As well, 93% of those surveyed in the current study said that compliance costs under the new HST system are either the same or lower than they had been for the previous GST.

"The study of the impact offers strong evidence of the advantages of both tax harmonization and single administration," Mr. Cauchon added. "The research indicates that we are achieving our objective of minimizing the frustration and paper burden imposed on business, while reducing overlap and duplication."

Registrants see many benefits to the new system. Changes cited as being favourable include: dealing with only one tax and set of forms; less paperwork; the paperwork takes less time; the new tax is easier to understand; being able to submit sales tax to one agency, with one cheque; no longer having two separate filing deadlines; having only one account number and sales tax statement; and dealing with one auditor.

The report, produced for Revenue Canada by Plamondon & Associates Inc., was based on a telephone survey conducted by Ekos Research in late March 1999. With a survey sample of this size, the margin for error is plus/minus 4.3%, 19 times out of 20.

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Michel Cléroux
Media Relations
(613) 957-3504