Former prime minister Brian Mulroney, left, and Michael Wilson go over the federal budget in the PM's office in 1991. Mulroney used a little-known provision in the Constitution to stack the upper chamber with eight extra Tory members to help pass the GST legislation. (Ron Poling/Canadian Press)

By CBC News

The GST turns 20 on Jan.1 and despite years of taking criticism for implementing the controversial and unpopular tax, former prime minister Brian Mulroney says he would do it all over again if he had to.

"Quite frankly, it's interesting to me to sit back many years later, having had to endure the abuse and recriminations and the pounding, and to see that it's turned out well for Canada," Mulroney told The Canadian Press in a lengthy interview. "That's all I wanted."

The seven per cent goods and services tax was created to replace a hidden 13.5 per cent manufacturers sales tax that was seen as unsustainable. The Liberal-dominated Senate had refused to ratify the new tax measure, which led Mulroney to use a little-known provision in the Constitution to stack the upper chamber with eight extra Tory members. After months of contentious debate, the Senate passed the GST legislation, and the new tax went into effect Jan.1, 1991.

The tax was highly unpopular but economists insist Mulroney made the right decision.. Many economists say taxing consumption helps to generate the large revenues needed to reduce national deficits. It also allows governments to reduce income taxes, giving workers an added incentive to put in longer hours and seek higher-paying jobs, thereby increasing output.

"Most economists agree to varying degrees," said Bank of Montreal deputy chief economist Douglas Porter. "I happen to think it was one of the better moves by federal governments in recent decades."

With files from The Canadian Press

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CBCNews.ca community members engaged in a spirited debate over the merits and necessity of enacting the GST two decades ago.

CAB123 sided with the economic argument for this type of taxation. "Although the vast majority of us really hate the GST, regardless of their political affiliation, implementing it was a good decision from a government's stand point."

Gunner1954 agreed, saying it was a "necessary evil" that got rid of the manufacturing tax.

Teacup Tootsie believed the GST was a "good move" because an "up front, in-your-face-tax always is," but had some harsh experiences working in retail at the time the new tax came into effect. "It was nearly three years before someone stopped hurling insults at me on a daily basis. It was so bad I would hand out my MP's phone [number] and suggest this was the person to shout at -- not the person behind the till."

However, many CBCNews.ca readers argued that the GST was not a good measure, and still begrudge Mulroney.

"We still have deficit and we still have GST," wrote jackbrian. "Guess it was another boondoogle solution by politicians that only know how to spend tax payers' money into deficits and borrow over $850 billion to run deficits for the last 30 odd years."
 
Resologist said the problem with the GST is that it hurts the consumer. "Previous to the introduction of the GST, the manufacturing taxes were often included in the price of goods, whether the goods were purchased by consumers or businesses. Everyone paid. Now, businesses can deduct any GST paid as credits against any GST that they've collected; so, only the consumer pays. Is it any wonder that businesses (which have not had to pay their share of the old taxes and benefit from it), praise the continued imposition of the GST and HST upon consumers?"

Community member GERETIRED agrees with the concept of a value-added consumption tax but thinks the GST was "poorly sold" and "implemented at the wrong time."

"I firmly believe that we should have a substantial increase in GST! Wait now, don't get too excited! The increase should be offset by a reduction in personal income tax that would make it neutral to most of the middle class that pay most of the taxes in this country and lower for the poor."

Let's continue the conversation. Do you think the implementation of the GST 20 years ago was the right move at the time? Let us know in the comments below.

(This survey is not scientific. It is based on readers' responses.)