6.1 Concepts and definitions

Taxes on products

6.9 Taxes on products¹ are taxes payable per unit of some good or service sold. The tax may be a specific amount of money per unit or it may be calculated as a specified percentage of the goods and services sold. Taxes on products include:²

• general sales taxes such as the Goods and Services Tax (GST) and provincial retail sales taxes;
• taxes on alcoholic beverages and on tobacco, which include special taxes, excise taxes and duties collected on the production and sale of alcoholic beverages and tobacco products;
• taxes on entertainment, which include taxes collected on tickets to cinemas and theatres and on recreational, cultural and other entertainment activities. Taxes levied by provincial governments on pari-mutuel betting at racetracks and on casino gambling also fall into this category;
• taxes on fuels, including the revenue from special taxes on gasoline, aircraft fuel, diesel fuel, propane and other substances used as fuel;
• custom duties are solely the domain of the federal government; they include the revenue from duties imposed on goods imported into Canada, such as manufactured goods, food, beverages and tobacco;
• profits from the sale of alcoholic beverages and gambling cover all profits earned by government-owned liquor boards, lotteries and other gaming corporations. Since these organizations are fiscal monopolies, their profits are treated as taxes on products because it is impossible to determine if they are derived from market forces or the fact that they are monopolies;
• other consumption taxes include airport security taxes, taxes on meals and hotel rooms and various other consumption taxes.

Taxes on factors of production

6.10 Taxes on factors of production³ are paid by enterprises and are related to operations. Such taxes are collected regardless of the level of goods and services production. They must be paid even in the absence of production. These taxes are payable on land, fixed assets, labour or certain types of activities. Taxes on factors of production include:⁴

• all forms of land taxes (property taxes, property transfer fees, business taxes, etc.);
• taxes on payroll;
• vehicle licences (fees and permits);
• taxes and permits from the exploitation of natural resources;
• farm insurance premiums;
• taxes on insurance premiums;
• other licences and permits associated with operations paid by enterprises; and
• fines and penalties imposed on enterprises.

Subsidies on products and on factors of production

6.11 Subsidies⁵ are current payments without compensation that governments make to enterprises on the basis of their production activity or the quantity or value of the goods and services they produce, sell or import. Subsidies are equivalent to negative taxes on production.

6.12 Subsidies on products⁶ are payable per unit of a good or service sold. They may be a specific amount of money per unit or may be calculated as a specified percentage of the goods and services sold. A subsidy may also be calculated as the difference between a specified target price and the market price actually paid by a buyer.

6.13 Subsidies on factors of production⁷ are paid to enterprises based on their production activities. These subsidies include, for example, subsidies on payroll or workforce or subsidies to reduce pollution.

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• 6.2 Annual estimation methods and data sources

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• 6 Taxes less subsidies

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Notes

1. In the System of National Accounts 1993 (SNA 1993), this aggregate appears under "Taxes on products" in the Primary Distribution of Income Account and is described in paragraphs 7.62 to 7.69.

2. The descriptions of the types of taxes on products are based on the descriptions in section 6.07 of the Financial Management System (FMS), catalogue no. 68F0023.

3. In the System of National Accounts 1993 (SNA 1993), this aggregate appears under "Other taxes on production" in the Primary Distribution of Income Account and is described in paragraph 7.70.

4. The descriptions of the types of taxes on factors of production are based on the descriptions in sections 6.08 and 6.09 of the Financial Management System (FMS), catalogue no. 68F0023.

5. The description of subsidies in this paragraph is based on paragraph 7.71 of the System of National Accounts 1993 (SNA 1993).

6. In the international system, this aggregate appears under "Subsidies on products" in the Primary distribution of Income account. This item is described in paragraphs 7.73 to 7.78 of the System of National Accounts 1993.

7. In the international system, this aggregate appears under "2. Other subsidies on production" in the Primary Distribution of Income Account. This item is described in paragraph 7.79 of the System of National Accounts 1993.