If you are one of the many who are wondering what Goods and Services Tax stand for, then it is about time to learn. This is simply a replacement of the Value Added Tax (VAT), excise duty tax, service tax, manufacturer’s sales tax, and other tax schemes. It seeks to simplify all types of tax into one structure. The implementation of this tax structure differs in every country but with the sole purpose of helping the nation’s budget. GST is commonly imposed on the goods and services sold to consumers.
GST is not levied on all products. Some of the countries using GST as form of tax policy impose it on various goods and services but there are other products that are exempted with the tax. Countries that use GST policy are: Singapore, Australia, Canada and New Zealand.
In Canada, GST is introduced on January, 1991 by Prime Minister Brian Mulroney to replace the manufacturer’s sales tax (MST). The tax is levied on goods and services sold in their market except the medical services, residential rent, grocery items, etc. Visitors that buy goods in Canada are entitled to tax-free buying. They will get a refund of the taxes added to the products when they file for refund. As of June 2010, the GST rate of Canada is 5%.
On April 1994, the government of Singapore introduced GST. In the past, Singapore has very high taxes for the people and the Economic Committee has seen this. To lift the burden from the citizens, GST was chosen by the government as a replacement tax policy so tax payments are lowered. GST is exempted on some goods and services needed by the people such as rent of residence and sales. Exported product also has zero rates in GST. 7% is the current rate Singaporean GST.
In Australia, GST is introduced on July, 2000 by the Howard Government. The GST is introduced to replace many government taxes such as banking taxes, Federal wholesale sales tax system, stamp duty, etc. Like Singapore, Australia’s GST is their Value Added Tax and it is levied on all goods and services. The GST of Australia is at 10%.
On October 1986, the New Zealand Government introduces the GST. Once again, the GST of New Zealand is also their VAT or value added tax (like Singapore and Australia). GST is imposed on regular goods consumed by the people. The only products and services with zero GST is the Donation, rent of properties, financial services and exported goods.
Some people are often burdened by the existence of Goods and Services Tax especially those who are earning lower wages. GST increases the prices of goods and services which are daily necessities of everyone. Some are having a hard time purchasing the goods and services they need because the price is increased and they cannot afford it. Despite these effects of GST on some citizen, the tax policy highly benefits the nation.
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