The GST replaced the Manufacturers Sales Tax, which was unevenly applied.  On top of that, the GST is a value-added tax.  A company only pays the GST on the value that it adds to a product or service, meaning that it deducts the GST it pays on inputs.  So, in answer to your question, the economy did not tank with the introduction of the GST because it did not introduce an across-the-board 7% tax on everything, as your post implies.