Lesson 15 — Activity 1: What are Taxes?
Completion requirements
Lesson 15 — Activity 1: What Are Taxes?
Warm Up
No doubt you have heard the word "taxes." A tax is an amount of money paid to the government.
In this activity, you will learn about the kinds of taxes Canadian citizens pay.
There are several different kinds of taxes, but the one you see most often is the good and services tax, or GST. GST is charged on almost every item you buy, and this means that you pay 5% of the price of the item in tax.
If this tee shirt is $10.00, it will cost $10.50 with the GST.
Although a tax of five cents on every dollar might not seem like much, it does add up quickly when you think of all the people in Canada who spend money every day. If a store sells $1,000 worth of goods in a day, then $50.00 in GST is collected. In Canada each year, billions of dollars in GST are collected.
If you buy a new car for $30, 000, you'll pay an extra $2, 100 in GST.
How much GST do you pay? Think about five things you have bought in the last few weeks. In the Self-check Activity below, you will fill in these things and the price you paid for them. If you can't remember the exact price of the items, take your best guess.
Alberta is the only province in Canada that does not have a provincial sales tax (PST). A provincial sales tax is like the GST because you pay it on items you buy. In most provinces, the GST and PST add up to about 15%, or fifteen cents on every dollar spent.
There are other taxes that people in Canada pay, and they are:
Federal Income Tax
This is the money you must pay to the Government of Canada. Income is the amount of money you earn. The amount of federal income tax you pay depends on how much money you earn. People who earn below a certain amount don't pay federal income tax, but other people may pay more than 25% of their earnings.
Provincial Income Tax
This is like federal income tax except the money goes to the provincial government instead of the federal (Canadian) government. The percentage of your earnings that you pay in provincial income tax depends on which province you live in, but those who earn less pay less.
