Category Tax policy
Fiscal Clout and Federation Redesign
The Parliamentary Budget Office has issued a very pleasing report on federal fiscal sustainability but the flip side is that the provinces and territories are now not fiscally sustainable because of their rising health costs and the federal fiscal gap created by the change in the Canada Health Transfer escalator. According to Andrew Coyne, the […]
Is this a bank bailout by the CMHC? Quotas vs tariffs.
I learn from the CBC that the Canadian Mortgage and Housing Corporation has imposed a quota of $350 million per month per individual bank (or other lender) on the amount of mortgage-backed securities it will guarantee. Presumably the CMHC did this because the Federal government wanted to put a cap of $85 billion on the […]
New taxes are usually inefficient or unpopular – and that’s a good thing.
My last post contained a diagram suggesting that no tax is both popular and efficient. On twitter, Matt Cowgill suggested the diagram was wrong. Taxes on resource rents are both popular and efficient. Michael Kushnir suggested carbon taxes as another possibility. If Cowgill and Kushnir are right, then the set of efficient taxes interesects the set of popular taxes:
Promoting Consumption Taxation in Canada
Consumption taxation is making the news again in Canada. Manitoba’s PST hike to 8 percent that was announced in April’s provincial budget kicked in on July 1st. At the public hearings into the increases and in the media, the increase has received a lot of criticism despite the claim the increase will be temporary and […]
Taxation of the family: everything old is new again
Matt Krzepkowski and Jack Mintz have recently produced a working paper titled "No More Second-Class Taxpayers: How Income Splitting Can Bring Fairness to Canada's Single-Income Families." The paper argues that higher income single-earner married couples are "disadvantaged by the current system." It proposes to put an end to that by allowing income splitting, so a […]
Fiscal Equity, Taxes and GTHA Transit
Federal Finance Minister Jim Flaherty has shot down Ontario Premier Kathleen Wynne’s proposal that the 34 billion dollar Metrolinx Greater Toronto and Hamilton Area (GTHA) transit expansion plan could be funded by a special regional increase in the provincial portion of the HST. For this to happen, Ottawa would have to agree to Ontario’s request […]
Friends for Myles: Social networks and tax compliance
One reason why people pay their taxes is that they’re afraid of being caught, and fined, if they cheat. In the simplest possible model of tax evasion, people only comply with the tax code if the benefits of evasion – the savings in taxes paid - are less than the costs – the probability of […]
Taxation and Economic Growth
I had a bit of an intellectual crisis this evening as I pondered the conventional wisdom in economics regarding the choice between reducing consumption taxes or income taxes. Briefly put, the simple conventional wisdom is that taxes on consumption are preferred to income taxes because they encourage saving and long-term capital formation and economic growth. […]
Minding the Gap
The Mowat Centre has issued a new report on Ontario’s fiscal balance within the Federation called "Filling the Gap: Measuring Ontario's Balance within the Federation." The report finds that: “based on the latest available figures, Ontarians transfer approximately $11B on net to the rest of Canada. This transfer is equivalent to 1.9% of the province’s […]
Toilets, Governments and Incentives
In my morning newspaper, I came across a hardware store flyer advertising a great new innovation – toilet with pump! Essentially, along with your regular toilet, an additional water storage tank and pump is installed that allows you to store recycled water used from your sink, tub, or shower and then use it when you […]
Worthwhile Canadian Initiative 
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