Mr. Speaker, the goods and services tax, GST, imposed under the Excise Tax Act applies to a very broad base with only a limited number of zero-rated items, such as basic groceries, prescription drugs, certain medical and assistive devices and exports. It is preferable to tax a broad base of goods and services since this allows for a more efficient and simpler tax and provides for a lower tax rate. In this regard, the government delivered on its commitment to reduce the GST rate by two percentage points, from 7% to 5%. Overall, the savings from this measure vary from year to year. It is estimated that it will provide $13.6 billion in tax savings to Canadians in 2013-14.
Reading materials are generally taxable under the GST. However, to encourage literacy, educational institutions, public libraries and non-profit groups whose primary purpose is the promotion of literacy are eligible for a full rebate of the GST on all printed books. The Tax Expenditures and Evaluations 2012 report estimates that $20 million was claimed under the GST book rebate in 2012.
Statistics Canada’s system of national accounts contains data on spending by Canadians on printed and electronic reading materials, including newspapers, periodicals and books. Based on these data, it can be expected that the cost of zero-rating those goods would be in the order of $280 million annually in forgone federal GST revenues.