Prince Edward Island 10% Quebec and Prince Edward Island add their sales taxes on top of the combined price and GST, so you're paying tax on tax
Which items the tax is applied to also varies by province. The Yukon Territory, Northwest Territories and Nunavut do not have any type of regional sales tax.
Goods and Services Tax
Under Brian Mulroney's government in the early 1990s a federal sales tax, the Goods and Services Tax (GST) was introduced. It caused much controversy when it was implemented, but today has became a crucial source of federal revenue. The rate is 7% and it is applied to a wide variety of items, many of which are exempt from provincial taxes. In Quebec and Prince Edward Island, the PST is also applied on top of the GST.
Harmonized Sales Tax
When Jean Chrétien's Liberals came to power in 1993 they promised to abolish the GST. This proved impractical, however, and instead they opted to attempt to merge the GST with the PST in each province. Only three Atlantic provinces--New Brunswick, Newfoundland and Labrador, and Nova Scotia--agreed to this, however. These provinces thus have the Harmonized Sales Tax or HST, a 15% tax that replaces both the local PSTs and the GST. This was also a useful for easily calculating tax. For example, in Newfoundland prior to HST, the tax value worked out to be 19.84%. With 15%, it can be thought of as (10+5)%, which becomes really easy to calculate without a calculator. For example, given a price of $12.34, you would take 10% of that ($1.23), divide that by two ($0.62), add them together ($1.85), then add to the original price ($14.19). Although this method is sometimes off by a cent or two, it is still useful when browsing through a store.
