What is GST, PST and HST? Give the rates for each of these in Ontario. What...

What is GST, PST and HST? Give the rates for each of these in Ontario. What is one advantage of the Pigouvian tax? Why was this tax system criticized?

Expert Solution

GST Tax- Goods and service Tax. Which is applied by federal government for all goods and services provided by the government.

PST Tax- Provincial Sales Tax- Which is applied in all Canadian Provinces except in Alberta and in those territories where the rate is zero. It levied by provinces.

HST Tax- A consumption tax, where the Federal government’s GST and Provincial Government’s PST are combined in to a single value added tax. HST stands for Harmonised Sales Tax.

GST is applied by Federal government and in Canada the rate is 5%

HST in Ontario is 13%- on which Provincial Sales tax is 8% and Federal Government’s GST rate is 5%.

One advantage of Pigouvian tax-

It promotes market efficiency by absorbing the additional costs created by negative externalities. Negative externalities are those which causes indirect tax to individuals.

Pigouvian tax system is criticized because-

1. The negative externalities are difficult to realise in real world.

2. Puts more burden on the Economically Weaker Section of the society.

3. Pigouvian tax system is not efficient in long run.

Rahul Sunny answered 2 years ago

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