Can you image paying a tax every time that you use your debit card or write a cheque to the gas company? For much of the last century, Canadians had to pay a tax on every transaction made with a cheque or money draft. Under the Special War Revenue Act of 1915, an excise tax on non-cash transactions was invoked, like income tax, to increase revenue during the war.
Under terms of the excise, a tax of 2 cents per document was charged on every financial transaction where cheques or drafts were used. One was required to stick a stamp on these items as proof of having paid the tax. They were often regular postage stamps as well as special excise tax stamps, but confusion over calculating exact revenues led to a policy prohibiting the use of postage stamps in 1923. You could purchase excise stamps at a chartered bank or your local customs and excise office.
As with any tax, there were those who sought to avoid paying it. One Ontario businessman was sentenced to a fine or a 3 month prison term for removing cancelled excise stamps from old cheques and reusing them on new ones. When police raided his business, they found a quantity of stamps showing signs of cancellation and unused cheques with these “adjusted” stamps already affixed for future use.
Over the years, there were several changes to the act: the tax rate was changed, the number of items affected was expanded and exemptions for special user groups were introduced. With the 1953 federal budget came the repeal of the stamp tax, closing a colourful chapter in Canada’s monetary history. Unused stamps were refundable for cash at customs and excise offices across the country. We’re still waiting for the repeal of income tax.
The illustrations accompanying this article are of artifacts from the National Currency Collection of the Bank of Canada.