Finances of the Nation: Taxing Consumption in Canada: Rates, Revenues, and Redistribution

Posted: 2 Feb 2017

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)

Date Written: February 1, 2017

Abstract

This article examines the role of sales and excise taxes in government revenues and in the Canadian economy. In particular, it explores the distributional effects of consumption taxes among Canadian households, to determine whether and to what extent the tax burden is borne disproportionately by low-income households rather than high-income households. The authors present data on statutory sales tax rates and track the share of sales and excise taxes in Canada's gross domestic product and government revenues over the past 34 years (1981-2014). They then analyze cross-sectional data on consumption patterns and tax payments of Canadian households, and conclude that the presumed regressivity of sales taxes -- particularly general sales taxes like the goods and services tax -- is far from clear.

Keywords: sales taxes, excise taxes, rates, revenue, incidence, redistribution

Suggested Citation

Bird, Richard Miller and Smart, Michael, Finances of the Nation: Taxing Consumption in Canada: Rates, Revenues, and Redistribution (February 1, 2017). Canadian Tax Journal, 2016, Vol. 64, No. 2, p. 417, Rotman School of Management Working Paper No. 2909918, Available at SSRN: https://ssrn.com/abstract=2909918

Richard Miller Bird (Contact Author)

University of Toronto - Joseph L. Rotman School of Management ( email )

105 St. George Street
Toronto, Ontario M5S 3E6 M5S1S4
Canada
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Georgia State University - Andrew Young School of Public Policy

International Studies Program
Atlanta, GA 30303-3083
United States

HOME PAGE: http://www.aysps.gsu.edu

Michael Smart

University of Toronto - Department of Economics ( email )

150 St. George Street
Institute for Policy Analysis
Toronto, Ontario M5S 3G7
Canada
416-978-5119 (Phone)
416-978-6713 (Fax)

CESifo (Center for Economic Studies and Ifo Institute)

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Munich, DE-81679
Germany

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