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

Listed author(s):
  • Étienne Desjardins
  • Mélina Longpré
  • François Vaillancourt
Registered author(s):

    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. Ce texte présente une entente financière inter-gouvernementale inusuelle soit un paiement par les entités constituantes d'une fédération au gouvernement central pour obtenir l'occupation exclusive par elle-même d'un champ fiscal. Nous présentons donc l'historique des relations fédérales-provinciales au Canada dans le domaine du jeu de hasard, mettant l'emphase sur la période 1976-1980 lorsque les deux niveaux de gouvernements opéraient des loteries. Nous retraçons les diverses tentatives de parvenir à une entente sur le partage de cette source de revenus. Le partage des revenus fut rejeté, le partage des marchés fut convenu, mais depuis 1980, les provinces versent un paiement annuel au gouvernement fédéral pour un droit d'occupation exclusive du domaine du jeu de hasard. Des résultats d'une analyse multivariée indiquent qu'en 1978 et 1979, la présence de Loto-Canada réduisait les revenus du jeu des provinces; elles avaient donc raison d'en chercher l'occupation exclusive. Ce texte indique, à l'aide de simulations numériques, que l'entente en vigueur est très avantageuse pour les provinces, car elle ne tient pas compte de la croissance du marché des loteries et de la diversification du marché du jeu de hasard.

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    Paper provided by CIRANO in its series CIRANO Working Papers with number 2012s-21.

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    Length: 23 pages
    Date of creation: 01 Aug 2012
    Handle: RePEc:cir:cirwor:2012s-21
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    1. Mikesell, John L., 1994. "State Lottery Sales and Economic Activity," National Tax Journal, National Tax Association, vol. 47(1), pages 165-71, March.
    2. Mikesell, John L., 1994. "State Lottery Sales and Economic Activity," National Tax Journal, National Tax Association, vol. 47(1), pages 165-171, March.
    3. Tosun, Mehmet Serkan & Skidmore, Mark, 2004. "Interstate Competition and State Lottery Revenues," National Tax Journal, National Tax Association, vol. 57(2), pages 163-178, June.
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