History of taxes

Tax as we know it today, existed in various forms throughout civilization. Kings, queens, chiefs, rulers, and people in authority collected taxes from the people they ruled. What was taxed, when it was taxed, and how much tax was imposed varied from society to society. Often people paid their tax bill with something they produced or gathered, such as grain, fish, minerals or animals.

Taxes in Canada

Before Confederation

The colonial governments collected taxes, usually through customs duties, and sent them to the two mother countries, England and France.

Canada becomes a nation

Following Confederation in 1867, the new government was given the power to raise money by taxation and responsibilities were divided between the federal and provincial governments. The most expensive areas of responsibility such as building railways, roads, bridges, and harbours, became the responsibility of the federal government. The provincial governments assumed responsibility for education, health, and welfare.

Britain declares war on Germany

As a British colony, Canada joined World War I at Britain's side in 1914. The pressures of financing the war resulted in increasing customs and excise taxes, and in 1916, the federal government began collecting corporation tax.

Government needs revenue to finance war

In 1917, as a temporary measure to help finance the war, the federal government introduced the Income Tax War Act, covering both personal and corporate income. "I have placed no time limit upon this measure . . . a year or two after the war is over, the measure should be reviewed," stated Sir Thomas White, Minister of Finance.

War ends, expenses continue

After the war ended in 1918, the government still needed to pay for war-related expenses such as veterans’ pensions and debt interest, and so in 1920, the federal government introduced sales tax.

Income tax is here to stay

By 1948, income tax was no longer considered temporary and the Income War Tax Act was replaced with the Income Tax Act.

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