The Economic Council’s Road Map for Tax Reform laid the groundwork for a greater discussion of the consumption tax principle as a basis for taxation in Canada. In his paper, Jack M. Mintz continues this discussion by setting out the case for and against a consumption tax. He argues that the tax treatment of savings is likely to become a more central policy focus for the medium term. More practically, he cites three possible evolutionary changes that could lead to a greater reliance on consumption taxes: a sharp increase in sales tax revenues (sales and excise) to reduce reliance on income taxes; a major expansion of RRSP and pension limits to allow for greater accumulation of wealth to meet future contingencies of various sorts; and the introduction of an exempt-yield tax savings plan (with restrictions on contributed amounts) that would encourage saving by individuals expecting increases in future tax rates. More fundamentally, Mintz observes that the income tax could even be replaced with an expenditure tax system with continuing reliance on the other indirect forms of consumption taxation (sales taxes). Even though Mintz believes that the adoption of a consumption tax would certainly set Canada apart from other countries, including the United States, he holds that the technical issues, including implementation and transition issues, are not insurmountable if promoting future consumption is the key to Canada’s overall development.
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ReDIF This chapter was published in: Patrick Grady & Andrew Sharpe (ed.) The State of Economics in Canada: Festschrift in Honour of David Slater, Centre for the Study of Living Standards, pages 79-94, 2001.
Find related papers by JEL classification: O51 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - U.S.; Canada E21 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy D91 - Microeconomics - - Intertemporal Choice and Growth - - - Intertemporal Consumer Choice; Life Cycle Models and Saving
References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
Gale, W.G. & scholz, J.K., 1992.
"IRAS and Household Saving,"
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9244, Tilburg - Center for Economic Research.
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