The GST Cut and Fiscal Imbalance
The federal government is reducing its GST rate from 7% to 5%. We examine a broader reform in which this reduction in federal tax rates and revenues is accompanied by a similar reduction in federal transfers to the provinces. At the same time, the provinces may if they wish increase their own sales tax rates to make up the difference, while some provinces, including Ontario, reform their retail sales taxes to emulate the federal GST more closely. We analyze the likely impacts of such reforms on provincial revenues, tax incidence, and business investment. The result of combining these measures would be (1) a better ‘balanced’ federation, with less room for ‘blame-shifting’ between levels of government and consequently greater accountability at all levels, and (2) owing to the removal of the present surprisingly heavy tax on investment imposed by the provincial retail sales taxes an expansion in investment and, over time, in productivity, employment, and perhaps economic growth.
|Date of creation:||Jun 2006|
|Date of revision:|
|Contact details of provider:|| Postal: 105 St. George St., Toronto, Ontario, M5S 3E6|
Phone: 416 978 2451
Web page: http://www-2.rotman.utoronto.ca/iib
More information through EDIRC
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.:
- Richard M. bird, 2003. "Taxation in Latin America: Reflections on Sustainability and the Balance between Equity and Efficiency," International Tax Program Papers 0306, International Tax Program, Institute for International Business, Joseph L. Rotman School of Management, University of Toronto.
- Jack Mintz & Michael Smart, 2001.
"Income Shifting, Investment, and Tax Competition: Theory and Evidence from Provincial Taxation in Canada,"
CESifo Working Paper Series
554, CESifo Group Munich.
- Mintz, Jack & Smart, Michael, 2004. "Income shifting, investment, and tax competition: theory and evidence from provincial taxation in Canada," Journal of Public Economics, Elsevier, vol. 88(6), pages 1149-1168, June.
- Jack M. Mintz & Michael Smart, 2001. "Income Shifting, Investment, and Tax Competition: Theory and Evidence from Provincial Taxation in Canada," International Tax Program Papers 0402, International Tax Program, Institute for International Business, Joseph L. Rotman School of Management, University of Toronto, revised Apr 2003.
- Maximilian Baylor & Louis Beauséjour, . "Taxation and Economic Efficiency: Results from a Canadian CGE Model," Working Papers-Department of Finance Canada 2004-10, Department of Finance Canada.
- Richard M. Bird, 2005.
"Value-Added Taxes in Developing and Transitional Countries: Lessons and Questions,"
International Tax Program Papers
0505, International Tax Program, Institute for International Business, Joseph L. Rotman School of Management, University of Toronto.
- Richard M. Bird, 2005. "Value-Added Taxes in Developing and Transitional Countries: Lessons and Questions," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0505, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
- Richard Bird & Pierre-Pascal Gendron, 2000. "CVAT, VIVAT, and Dual VAT: Vertical ``Sharing'' and Interstate Trade," International Tax and Public Finance, Springer, vol. 7(6), pages 753-761, December.
- Winer, Stanley L, 1983. "Some Evidence on the Effect of the Separation of Spending and Taxing Decisions," Journal of Political Economy, University of Chicago Press, vol. 91(1), pages 126-40, February.
- Andrew Sharpe, 2003. "Linkages Between Economic Growth and Inequality: Introduction and Overview," Canadian Public Policy, University of Toronto Press, vol. 29(s1), pages 1-14, January.
When requesting a correction, please mention this item's handle: RePEc:ttp:itpwps:0604. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Richard Bird)
If references are entirely missing, you can add them using this form.