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Finances of the Nation: Mitigating the Economic Impacts of Population Aging on Growth and Public Revenues—Can the Tax Mix Help?

Author

Listed:
  • Bertrand Achou

    (HEC Montréal)

  • Yann Décarie

    (HEC Montréal)

  • Luc Godbout

    (Université de Sherbrooke)

  • Pierre-Carl Michaud

    (HEC Montréal)

  • Julien Navaux

    (HEC Montréal and École des sciences de la gestion, Université du Québec à Montréal)

  • Suzie St-Cerny

    (Université de Sherbrooke)

Abstract

In this article, the authors address concerns about the impact that the aging of Canada's population over the coming decades could have on economic growth and, consequently, growth in government revenues. They explore how revenue-neutral changes in the tax mix today could mitigate those concerns and raise more revenue than is projected in current forecasts with a status-quo scenario. Using data for Quebec, the authors show that a shift in the relative share of total revenues from personal income taxes to consumption taxes could be quite effective over the next four decades. A revenue-neutral shift equivalent to 1 percent of the province's consumption tax revenues today would result in an increase in revenues ranging between 0.3 percent and 1.0 percent by 2060, while a shift equivalent to 25 percent of consumption tax revenues would generate additional revenues of 1.4 percent to 4.8 percent.

Suggested Citation

  • Bertrand Achou & Yann Décarie & Luc Godbout & Pierre-Carl Michaud & Julien Navaux & Suzie St-Cerny, 2022. "Finances of the Nation: Mitigating the Economic Impacts of Population Aging on Growth and Public Revenues—Can the Tax Mix Help?," Canadian Tax Journal, Canadian Tax Foundation, vol. 70(4), pages 885-893.
    • Handle: RePEc:ctf:journl:v:70:y:2022:i:4:p:885-893
    DOI: https://doi.org/10.32721/ctj.2022.70.4.fon
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