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The topsy-turvy sharing of the gaming tax field in Canada, 1970-2010: provincial payments, federal withdrawal

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  • Étienne Desjardins
  • Mélina Longpré
  • François Vaillancourt

Abstract

This paper presents an unusual inter-governmental financial arrangement: a payment by constituent units of a federation to the federal government to keep it out of a fiscal field and thus gain sole occupancy for themselves. This paper thus presents the history of the federal/provincial relationship in the gaming field in Canada focusing on the key period of 1976-1980 when both levels of governments operated lotteries. It chronicles the attempts of both levels of governments to reach an agreement on their sharing of this revenue field. Revenue sharing was rejected, market slicing was agreed to but since 1980, the provinces have purchased a sole occupancy right through an annual payment to the federal government. It shows, using multivariate analysis, that the presence of Loto-Canada reduced provincial gaming revenues in 1978 and 1979 and thus that the provinces were right to seek sole occupancy of the lottery field. It also shows, using numerical simulations of alternative formulas, that the agreement negotiated is very advantageous for the provinces as it did not take into account either the future growth of the lottery market or the diversification of the gaming market in Canada from 1980 to 2010, let alone both.
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Suggested Citation

  • Étienne Desjardins & Mélina Longpré & François Vaillancourt, 2012. "The topsy-turvy sharing of the gaming tax field in Canada, 1970-2010: provincial payments, federal withdrawal," CIRANO Working Papers 2012s-21, CIRANO.
    • Handle: RePEc:cir:cirwor:2012s-21
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    File URL: https://cirano.qc.ca/files/publications/2012s-21.pdf
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    References listed on IDEAS

    as
    1. Richard M. Bird & Robert D. Ebel (ed.), 2007. "Fiscal Fragmentation in Decentralized Countries," Books, Edward Elgar Publishing, number 3864.
    2. Richard M. Bird & François Vaillancourt, 2007. "Reconciling Diversity with Equality: The Role of Intergovernmental Fiscal Arrangements in Maintaining an Effective State in Canada," Chapters, in: Richard M. Bird & Robert D. Ebel (ed.), Fiscal Fragmentation in Decentralized Countries, chapter 3, Edward Elgar Publishing.
    3. Mikesell, John L., 1994. "State Lottery Sales and Economic Activity," National Tax Journal, National Tax Association;National Tax Journal, vol. 47(1), pages 165-171, March.
    4. Tosun, Mehmet Serkan & Skidmore, Mark, 2004. "Interstate Competition and State Lottery Revenues," National Tax Journal, National Tax Association;National Tax Journal, vol. 57(2), pages 163-178, June.
    5. Mikesell, John L., 1994. "State Lottery Sales and Economic Activity," National Tax Journal, National Tax Association, vol. 47(1), pages 165-71, March.
    6. Richard M Bird & François Vaillancourt, 2001. "Fiscal Arrangements for Maintaining an Effective State in Canada," Environment and Planning C, , vol. 19(2), pages 163-187, April.
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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. When governments compete for lottery revenue
      by Economic Logician in Economic Logic on 2012-09-21 19:02:00

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    More about this item

    Keywords

    Lottery; Gaming revenues; fiscal federalism; Canada; Loterie jeu de hasard; fédéralisme financier; Canada;
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