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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- 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.
- 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.
- 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.
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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.).
- David Murrell & Weiqiu Yu, 2000. "The Effect of the Harmonized Sales Tax on Consumer Prices in Atlantic Canada," Canadian Public Policy, University of Toronto Press, vol. 26(4), pages 451-460, 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.
- 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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- Richard M. Bird & Jack M. Mintz & Thomas A. Wilson, 2006. "Coordinating Federal and Provincial Sales Taxes: Lessons from the Canadian Experience," International Tax Program Papers 0607, International Tax Program, Institute for International Business, Joseph L. Rotman School of Management, University of Toronto.
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