A Short, Juicy History of Taxation in Canada (No, It Didn’t Start with the CRA)

ByHesabu Tax Updated on

When you hear “taxes,” you probably think of stress, T4s, or watching half your paycheck ghost you. But have you ever wondered how this whole tax thing started in Canada? 🧐 Don’t worry, we got you. Here’s the TL;DR of how Canada went from zero taxes to… well, whatever we’re dealing with now.

📜 Chapter 1: Back When Canada Wasn’t Even Canada

Before Canada was officially a thing (aka pre-1867), we were just a bunch of British colonies vibing with fur trades and maple trees. Most government cash came from:

  • Customs duties (a.k.a. import taxes) 💼
  • Excise taxes on stuff like alcohol and tobacco 🍺🚬

Translation: If you wanted rum, you were helping build the economy. Cheers.

💥 Chapter 2: Canada Is Born… and Broke

In 1867, Canada became Canada. But being a new country isn’t cheap.

We still depended mostly on customs duties and excise taxes — no income tax yet. So if you didn’t drink, smoke, or import silk, you basically paid no tax. Must be nice, huh?

💣 Chapter 3: Income Tax Was Supposed to Be Temporary (👀)

Then came World War I (1914–1918). War = $$$. Canada needed serious funds, and in 1917, the government introduced the Income War Tax Act.

It was pitched as a “temporary” measure to fund the war.

Spoiler: it never left. 🫠

🏗️ Chapter 4: The CRA Is Born (Sort of)

Fast forward to the 1940s — after WWII, the federal government basically told the provinces, “Hey, we’ll collect your taxes for you. You’re welcome.”

This centralized tax collection led to the creation of what we now know as the Canada Revenue Agency (CRA) (though it got that official name in 1999).

Also, by now, we had:

  • Personal income tax
  • Corporate tax
  • Sales tax (👋 GST came in 1991)
  • Payroll taxes (CPP, EI — yes, they take that too)

🛍️ Chapter 5: The GST Drama of the ’90s

Let’s talk about the Goods and Services Tax (GST) — introduced in 1991 by then-PM Brian Mulroney.

Canadians hated it.

It replaced a hidden 13.5% manufacturer’s tax with a visible 7% GST. People were mad because it was obvious now how much they were paying. But transparency, right?

Eventually, provinces started merging their sales tax with GST to create the Harmonized Sales Tax (HST) — if you’re in Ontario, you know it all too well. 😩

🧾 Today: Taxes Power Everything (Even If It Hurts)

Now, the CRA collects over $350 billion a year in taxes to pay for:

  • Health care 🏥
  • Education 🎓
  • Roads and transit 🚗
  • Social programs like the Canada Child Benefit 👶
  • Even pandemic support (CERB, anyone?) 😷

So yeah, taxes are annoying, but they literally keep the country running.

🧠 Wait — So Why Does This Matter?

Taxes impact our daily life. We’re:

  • Starting businesses 💼
  • Investing in stocks & crypto 📈
  • Buying (or dreaming of) homes 🏡
  • Getting jobs and finally adulting 😬

And guess what? That means you’re dealing with taxes — whether you like it or not.

Understanding how taxes work (and where they came from) isn’t just boring history. It’s part of being financially smart AF.

🎤 Final Mic Drop

So the next time someone says “taxes are theft,” just remember: no taxes = no universal health care, no roads, and definitely no CERB. And yeah, taxes might’ve started as a war thing, but today, they’re what fund our society.

Besides, if you can figure out how to do eyeliner with a spoon and make viral AI parodies, you can definitely understand taxes.

Want to make taxes less painful? Follow us on YouTube and Instagram for simple tax tips and money moves that even your cat could understand. 😸💼

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