By Carolyn Ryan Perhaps not since the British government attempted to tax tea, leading to the American Revolution, has a tax measure had a greater effect on a country's political history.
Prime Minister Brian Mulroney's Progressive Conservative government announced plans in the late 1980s to bring in a goods and services tax. It was meant to boost Canadian competitiveness by replacing an existing tax charged at the wholesale level on manufactured goods, including those destined for export.
The GST came into effect in 1991, a broad-based national sales tax that added seven per cent to the cost of almost everything Canadian consumers bought, from their morning cups of coffee to their children's toys to their new houses.
Jean Chrétien's Liberals fiercely opposed the GST, but quickly realized once in power that they couldn't try to banish the deficit without the substantial amount of revenue the tax brought in. So the federal party that once promised to abolish the GST is now blasting a promise by Conservative Leader Stephen Harper to reduce it from seven per cent to five cent over the next five years.
Here are some of the political developments that have been credited in part or whole to the GST over the past 15 years:
The rise of the Reform party:
Many Alberta members of the Progressive Conservative Party of Canada quit in disgust over Mulroney's decision to impose a national sales tax. Thanks to healthy oil revenues, the province did not have a provincial sales tax, and residents liked paying the sticker price for their products, without a seven-per-cent surprise at the cash register.
Alberta was the birthplace of the Reform Party of Canada, formed in 1987, and the party gladly took in many of the disaffected Tories. The split in Canada's political right would go on to affect federal election results for more than a decade.
Rejection of the Charlottetown accord:
Some analysts believe an anti-Tory backlash caused by the GST helped defeat the 1992 referendum on the Charlottetown accord. For most of his last mandate, Mulroney had thrown himself into talks aimed at bringing Quebec back into the constitutional fold. The pact was designed to resolve constitutional tensions by giving the provinces more powers, eliminating trade barriers between provinces and recognizing Quebec as a "distinct society" within Canada.
There is an argument that had Mulroney personally been a more popular politician able to convince voters to support his ideas, Canadians might have endorsed the accord. After 54.3 per cent of voters rejected it, however, the sovereignty movement in Quebec mushroomed and still challenges Canadian unity today.
The death of the Progressive Conservative Party of Canada:
Anger over the GST was one factor cited when the federal Tories were nearly wiped off the electoral map in the October 1993 federal election. They dropped from 157 seats in the House of Commons to only two, with Prime Minister Kim Campbell among the defeated at the end of the night.
Mulroney had retired from politics eight months before, leaving his party plagued by a sputtering economy and its failure to solve the country's constitutional impasse - but also by its inability to convince Canadians that the GST was necessary.
The federal Progressive Conservatives would languish in the political wilderness for 10 years. Then they merged with the Canadian Alliance, the new name for the Reform Party of Canada, to unite the right in a party that would be named the Conservative Party of Canada.
Renewed frustration over the Senate's role:
At one point in the GST debate, legislation establishing the tax that had passed in the PC-dominated House of Commons was stopped in its tracks by the Liberal-dominated Senate. The upper chamber must approve all money bills, so the tax would have died had Mulroney not done something drastic.
So he did. The prime minister asked the Queen for permission to temporarily increase the number of senators by eight, using an obscure provision in the 1867 Constitution Act. He padded the Senate with eight Progressive Conservatives to push through the GST bill - eventually.
In protest, senators affiliated with opposition parties launched a two-month filibuster to delay its passage. The whole thing left a bad taste in the mouths of Canadians who were already questioning the value of an expensive Senate full of unelected political appointees. They renewed calls for so-called Triple-E reform, asking that the Senate be turned into an effective body made up of elected members with equal representation from the various parts of the country.
The end of voters' honeymoon with the Liberals:
The 1993 Liberal Red Book, a list of pre-election promises drafted by current Prime Minister Paul Martin and Chaviva Hosek, promised to replace the hated GST. One MP, Sheila Copps, even promised to resign if the tax were not scrapped.
Within a short time of taking office as finance minister, Martin realized that there was no easy way of fulfilling the promise, given how bad the country's finances were and how much revenue the tax generated (now amounting to more than $28 billion annually, and between 15 and 17 per cent of federal revenues each year).
Instead, Chrétien's government fiddled with the tax, combining it with provincial sales taxes in Newfoundland, Nova Scotia and New Brunswick to create the harmonized sales tax, or HST. Voters were not impressed.
MP John Nunziata voted against his government's first budget in protest and was banished from the Liberal caucus. Copps eventually succumbed to public pressure in her Hamilton-area riding and resigned her seat in May 1996, only to regain it in the byelection called to fill it.
