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7 Can. Tax J. 388 (1959)
The Nova Scotia Hospital (Sales) Tax: I. Development and Structure

handle is hein.journals/cdntj7 and id is 398 raw text is: The Nova Scotia Hospital (Sales) Tax I. Development and Structure John F. Due* The Nova Scotia Hospital Tax, which became effective January 1, 1959, was the first new provincial sales tax since 1950, the year of introduction of both the New Brunswick and Newfoundland levies. With Nova Scotia in the fold, there are only four provinces, Ontario, Manitoba, Alberta, and Prince Edward Island, which do not use this type of tax. As a supplement to the 1952-53 study by the author of the five provincial sales taxes then in operation,1 a similar study of the Nova Scotia tax was made in June of 1959 in the course of a three weeks stay in the province.2 The results are presented in three parts in successive issues of the Journal. Development of the Tax Consideration of the use of a sales tax in Nova Scotia dates back for a decade. In the period around 1950, the province was an active proponent in Dominion-Provincial tax confer- ences on a constitutional amendment to permit the provinces to levy a sales tax in the indirect form, that is, with legal liability for payment of the tax resting solely on the retailer. Such an amendment was under serious con- sideration by the provinces late in 1950, and that w i n t e r Premier MacDonald announced plans for a sales tax to meet an expected deficit, provided that the pending amendment became effective. But the plans for an amendment were abandoned as a result of the opposition of Quebec, and Premier MacDonald, in his June, 1951 Budget Message, indicated that he had given up plans for a sales tax, for the reason that the federal sales tax had been increased from 8 to 10 per cent. Other taxes were increased, and interest in a sales tax declined. The next serious discussion of sales taxation arose in connection with the city of Halifax rather than the province. In 1957 a Commission appointed to study the city's tax problem recom- mended the establishment of a 2 per cent city sales tax as part of a program to allow lower tax rates on commercial * Professor of Economics, University of Illinois. The author wishes to express his indebt- edness to the Canadian Tax Foundation for making the study possible; to the Canadian Retail Federation and its General Manager, Mr. E. F. K. Nelson, for their assistance; to Mr. T. A. Wood of Halifax for his help in arranging appointments; to Mr. V. M. Knight, Commissioner of Hospital Taxes; and to the many other persons who spared the time to discuss the problems arising with the tax and to arrange appointments with other business firms. 1 See Provincial Sales Taxes, Tax Paper No. 7 (Toronto: Canadian Tax Foundation, 1953). 2 The study involved interviews with govern- mental agencies, trade association officials, and a sample of 107 business firms (about 1 per cent of the total number of licensed firms), located in Halifax, Dartmouth, Bridgewater, Liverpool, Shelburne, Yarmouth, Kentville, Windsor, Hantsport, Sydney, Glace Bay, and Truro.

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