VAT in a Federal System: Lessons from Canada

Bird, Richard M.; Smart, Michael

doi:10.1111/pbaf.12052

VAT in a Federal System: Lessons from Canada

Public Budgeting & Finance, Vol. 34, Issue 4, pp. 38-60, 2014

23 Pages Posted: 5 Dec 2014

See all articles by Richard M. Bird

Richard M. Bird

University of Toronto - Joseph L. Rotman School of Management; Georgia State University - Andrew Young School of Public Policy

Michael Smart

University of Toronto - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute)

There are 2 versions of this paper

Date Written: Winter 2014

Abstract

For many years it has been argued that the value‐added tax (VAT) is neither desirable nor feasible as a subnational tax. At the same time, the existence of state retail sales taxes (RSTs) has been seen by some to be a major obstacle to introducing a federal VAT in the United States. Canada has demonstrated that both these barriers can be overcome. A federal VAT can work well regardless how (or if) states tax sales. In addition, a federal VAT may make it more feasible for states, if they wish, to introduce their own VATs.

Suggested Citation: Suggested Citation

Bird, Richard Miller and Smart, Michael, VAT in a Federal System: Lessons from Canada (Winter 2014). Public Budgeting & Finance, Vol. 34, Issue 4, pp. 38-60, 2014, Available at SSRN: https://ssrn.com/abstract=2534198 or http://dx.doi.org/10.1111/pbaf.12052