<Li> Common zero - rated items include basic groceries, prescription drugs, inward / outbound transportation and medical devices (GST / HST Memoranda Series ME - 04 - 02 - 9801 - E 4.2 Medical and Assistive Devices). Certain exports of goods and services are also zero - rated . </Li> <Li> For tax - exempt supplies, the supply is not subject to GST and suppliers do not charge tax on their exempt supplies . Furthermore, suppliers that make exempt supplies are not entitled to recover GST paid on inputs acquired for the purposes of making the exempt good or service (subject to certain public sector body rebates). Tax - exempt items include long term residential rents, health and dental care, educational services, day - care services, music lessons, legal aid services, and financial services . </Li> <P> In 1989, the Progressive Conservative government of Prime Minister Brian Mulroney proposed the creation of a national sales tax of 9% . At that time, every province in Canada except Alberta already had its own provincial sales tax imposed at the retail level . </P> <P> The purpose of the national sales tax was to replace the 13.5% Manufacturers' Sales Tax (MST) that the federal government imposed at the wholesale level on manufactured goods . Manufacturers were concerned that the tax hurt their international competitiveness . The GST also replaced the Federal Telecommunications Tax of 11% . </P>

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