The first known taxes in Canada were export taxes on furs imposed by the French regime in 1650. The French government soon replaced these with tariffs on imported goods. Tariffs continued to be of major importance during the period of British rule, which began in 1763. The British North America Act of 1867 stated that the provinces could levy income taxes, but could no longer levy tariffs. However, the levying of income taxes on individuals and businesses did not become widespread in the provinces until the end of the 19th century.
In 1917 the federal government, which had relied primarily on excise taxes, created both a personal income tax and a corporate income tax, both of which had previously been levied only by provinces. The federal government introduced a general sales tax in 1920. All the provinces created gasoline taxes in the 1920s and collected taxes on alcohol sales. During World War II the provinces suspended their income taxes.
After World War II, the federal government took over the income tax from the provinces, paying them a fee for this right. In 1962 the provinces regained the right to levy income taxes. All provinces soon imposed individual income taxes. (Except in the province of Québec, provincial income taxes are collected by the federal government and then given over to provincial governments.) Also, from 1973 to 1990, all provinces adopted some form of corporate income tax.
In 1991 the federal government introduced a goods and services tax (GST). This broad-based tax applies to most goods and services, although certain commodities, such as basic groceries and medical supplies, are exempt from the tax. In 2000 Canada adopted one of the largest tax cuts in its history. It was designed to reduce personal taxes an average of 15 percent over a five-year period.
In 1917 the federal government, which had relied primarily on excise taxes, created both a personal income tax and a corporate income tax, both of which had previously been levied only by provinces. The federal government introduced a general sales tax in 1920. All the provinces created gasoline taxes in the 1920s and collected taxes on alcohol sales. During World War II the provinces suspended their income taxes.
After World War II, the federal government took over the income tax from the provinces, paying them a fee for this right. In 1962 the provinces regained the right to levy income taxes. All provinces soon imposed individual income taxes. (Except in the province of Québec, provincial income taxes are collected by the federal government and then given over to provincial governments.) Also, from 1973 to 1990, all provinces adopted some form of corporate income tax.
In 1991 the federal government introduced a goods and services tax (GST). This broad-based tax applies to most goods and services, although certain commodities, such as basic groceries and medical supplies, are exempt from the tax. In 2000 Canada adopted one of the largest tax cuts in its history. It was designed to reduce personal taxes an average of 15 percent over a five-year period.
