When Brian Mulroney tendered his resignation as Canada's prime minister in June 1993 his sudden departure generated a flurry of correspondence between Australia and Canada. The Australian concern revolved around a goods and services tax (GST) proposed by the Australian Liberal Party and the unhappy coincidence of Mr. Mulroney's abrupt retirement from the political arena.
Australian journalists added fuel to the Liberals' anxiety by arguing that Mulroney's considerable unpopularity stemmed from the federal tax which he had initiated in 1989. Although it was determined that the general feeling against our former prime minister arose from a number of factors, not merely the GST, the end result was that Australian politicians became loath to introduce a tax with such a dismal history.
The Canadian Liberal government, however, did not shrink from retaining the GST, even though they had promised in their widely promulgated Red Book that "a Liberal government will replace the GST with a system that generates equivalent revenues."
On Oct. 23 a promising development in the fight to exempt reading materials from the GST took place, when the federal government and the governments of Nova Scotia, New Brunswick, Newfoundland and Labrador announced they had reached agreement on a new Harmonized Sales Tax (HST) which would replace the provinces' retail sales taxes and the federal GST in April 1997.
After considering the acute and articulate arguments of Premiers John Savage of Nova Scotia, Frank McKenna of New Brunswick, Brian Tobin of Newfoundland and the Atlantic university faculty associations, federal Finance Minister Paul Martin determined that books in the three provinces would not be subject to an increase in taxation.
Instead, the Atlantic provinces would provide point-of-sale rebates so that the provincial portion of the HST would not be applied against the sale of books.
However, Mr. Martin also determined that Ottawa would not be footing the bill for the GST change. According to a federal finance estimate, the Atlantic provinces will have to pay about $12 million to compensate for the federal loss in taxation revenue.
Philosophically, as well as fiscally, national taxation on books and reading materials remains a contentious issue.
An inexpensive and popular step for the finance minister would be to exempt small periodicals, both Canadian and foreign, from paying the GST. Not only does the federal government not generate significant revenues from these groups, but the GST also imposes a considerable burden on their administration and staff, which are customarily smaller than that of the larger periodical companies.
The GST also increases the cost of foreign journals as they are forced to impose a much higher administrative fee for Canadian subscriptions to compensate for the negative effect of the federal tax.
The Liberal government should also work towards extending the GST change on reading materials to each province in Canada in order to promote literacy and learning for all Canadians. Mr. Martin himself admitted in an interview with The Globe and Mail that he could not see how the GST was going to stimulate literacy.
In a 1993 speech, Deputy Prime Minister Sheila Copps earnestly stated that: "Food isn't subject to GST because it's a necessity. So are books. They're needed for young minds to grow."
And the United Nations Educational, Scientific and Cultural Organization (UNESCO) asked Canada in 1993 to consider abolishing entirely the GST tax on books.
Clearly, the application of the GST on reading materials is unpopular, but it also inflicts a significant additional economic burden on students and universities.
If the Liberal government is as committed to education as it has declared itself to be, then it must initiate a national GST exemption on all reading materials in Canada. Only by encouraging reading, rather than discouraging it through taxation, can the Liberal government effectively promote learning and literacy at all levels of Canadian society.