The Economic Incidence of Replacing a Retail Sales Tax with a Value-Added Tax: Evidence from Canadian Experience
A decade ago, several Canadian provinces replaced the retail sales taxes with value-added taxes. This paper estimates the effects of this tax substitution on consumer prices in the reforming provinces. Consistent with theory, we find that the resulting effective tax-rate changes were shifted forward to consumers in most sectors of the economy. The overall effect on tax-inclusive consumer prices was small, albeit perhaps somewhat regressive.
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Volume (Year): 35 (2009)
Issue (Month): 1 (March)
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References listed on IDEAS
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- Bird, Richard M. & Mintz, Jack M. & Wilson, Thomas A., 2006.
"Coordinating Federal and Provincial Sales Taxes: Lessons From the Canadian Experience,"
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- Raj Chetty & Adam Looney & Kory Kroft, 2009. "Salience and taxation: theory and evidence," Finance and Economics Discussion Series 2009-11, Board of Governors of the Federal Reserve System (U.S.).
- Patrick Blagrave, 2005. "An Analysis of the Impact of the Harmonized Sales Tax on Provincial Revenues in Atlantic Canada," Canadian Public Policy, University of Toronto Press, vol. 31(3), pages 319-332, September.
- G. C. Ruggeri & K. Bluck, 1990. "On the Incidence of the Manufacturers' Sales Tax and the Goods and Services Tax," Canadian Public Policy, University of Toronto Press, vol. 16(4), pages 359-373, December.
- James P. Feehan, 1985. "Provincial Government Taxation of Clothing and Footwear: Revenue and Equity Aspects," Canadian Public Policy, University of Toronto Press, vol. 11(1), pages 26-39, March.
- Richard M. Bird & Michael Smart, 2008. "The Impact on Investment of Replacing a Retail Sales Tax by a Value-Added Tax: Evidence from Canadian Experience," Working Papers Series 15, Rotman Institute for International Business, Joseph L. Rotman School of Management, University of Toronto, revised Jun 2008. Full references (including those not matched with items on IDEAS)
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