San Diego International Law Journal

Library of Congress Authority File


Document Type



Consumption taxes have been and continue to be utilized as a staple revenue producer within systems of taxation. The value-added tax (VAT) is one form of consumption tax that has grown in popularity among nations over the last several decades. In fact, after the passage of a goods and services tax (one type of VAT) in Australia in 2000, the United States now stands alone as the only remaining OECD nation, among its 30 members, without some form of a value-added tax on consumption. As the massive topic of tax reform continually appears at the forefront of the political landscape, having potentially far-reaching effects of a political, social and economic nature, this comment seeks to provide insight into one country's recent experience with a value-added tax. Section II of this paper includes a brief history of the value-added tax, an explanation of the basic structure of a VAT and its foundational principles, distinguished from alternative forms of taxation and concludes with a list of generally accepted economic effects resulting from the institution of a value-added tax. Section III delves into Canada's value-added tax, the Goods and Services Tax (GST), exploring the origins of GST, public opinion surrounding GST and its subsequent passage, purposes for its adoption, implementation, administration and enforcement, and a detailed look into the structure of the tax itself. Section IV investigates whether the economic effects from the Canadian GST have emulated those understood by the tax community to result from instituting a VAT and what Canada has done to address the effects brought about by the GST. Section V provides an overall conclusion about Canada's experience with the GST, what lessons, both good and bad, can be extrapolated and whether the Canadian experience encourages or cautions nations exploring the possibility of instituting a VAT.