Canadian economic professors have found a way to boost the federal government’s revenue by adding GST to food items.

During a conference, Michael Smart of the University of Toronto and Jack Mintz, head of the School of Public Policy at the University of Calgary, suggested that eliminating GST exemptions on food as well as medicines, books, tuition and financial services would raise revenue by $39 billion annually.

“You have to think about what taxes are for,” says Kurt Klein, professor of economics at the University of Lethbridge.

“Taxes are to provide public services. So we tax each other and when you have a bunch of exemptions like we do, you can understand that it’s not only very costly for business, but it’s a very inefficient system because it causes people to change their purchasing habits.”

He explains that if you were to buy six muffins from somewhere like Tim Hortons there would be no tax because it’s assumed it’s being eaten at home. But if you buy five muffins you have to pay the tax.

“The problem, of course, and the way that got them there, is because there’s the thought that poor people spend a greater portion of their money on food,” explains Klein.

He says there are many other ways to provide help for low-income people. “We already do it in many ways; we could do more if it’s needed.”

From an economic standpoint, adding GST to items currently exempt from it makes a lot of sense.

“It would be a much simpler system to collect, it would be a lot less costly to collect and would increase productivity in Canada which would help everybody,” explains Klein.

He believes that if you’re going to have tax on one thing, you have to tax everything.

“If you need to have a tax on consumption, which many people believe is a good way to have taxes, it should be on all consumption of all goods and all services. If that creates some standards problem with somebody, then you try to fix that with something, but you don’t mess with the tax system.”