Finances of the Nation: Mitigating the Economic impacts of Population Aging on Growth and Public Revenues—Can the Tax Mix Help?

10 Pages Posted: 2 Feb 2023

See all articles by Bertrand Achou

Bertrand Achou

HEC Montreal - Retirement and Savings Institute

Yann Décarie

Retirement and Savings Institute - HEC Montreal

Luc Godbout

FAC. ADM. Sciences comptables et de fiscalité

Pierre-Carl Michaud

HEC Montreal

Julien Navaux

HEC Montreal

Suzie St-Cerny

Université de Sherbrooke

Date Written: 2022

Abstract

For almost 60 years, the Canadian Tax Foundation published an annual monograph, Finances of the Nation, and its predecessor, The National Finances. In a change of format, the 2014 Canadian Tax Journal introduced a new “Finances of the Nation” feature, which presents annual surveys of provincial and territorial budgets and topical articles on taxation and public expenditures in Canada. In this article, the authors address concerns about the impact that the aging of Canada’s population over the coming decades could have on economic growth and, consequently, growth in government revenues. They explore how revenue-neutral changes in the tax mix today could mitigate those concerns and raise more revenue than is projected in current forecasts with a status-quo scenario. Using data for Quebec, the authors show that a shift in the relative share of total revenues from personal income taxes to consumption taxes could be quite effective over the next four decades. A revenue-neutral shift equivalent to 1 percent of the province’s consumption tax revenues today would result in an increase in revenues ranging between 0.3 percent and 1.0 percent by 2060, while a shift equivalent to 25 percent of consumption tax revenues would generate additional revenues of 1.4 percent to 4.8 percent. The underlying data for the Finances of the Nation monographs and for the articles in this journal will be published online in the near future.

Keywords: Tax Revenues, Personal Income Taxes, Consumption Taxes, Population Aging, Tax MIX, Quebec

Suggested Citation

Achou, Bertrand and Décarie, Yann and Godbout, Luc and Michaud, Pierre-Carl and Navaux, Julien and St-Cerny, Suzie, Finances of the Nation: Mitigating the Economic impacts of Population Aging on Growth and Public Revenues—Can the Tax Mix Help? ( 2022). Canadian Tax Journal/Revue fiscale canadienne, 2022, Vol. 70, No. 4, p. 885-893, Available at SSRN: https://ssrn.com/abstract=4343854

Bertrand Achou (Contact Author)

HEC Montreal - Retirement and Savings Institute ( email )

United States

Yann Décarie

Retirement and Savings Institute - HEC Montreal ( email )

United States

Luc Godbout

FAC. ADM. Sciences comptables et de fiscalité ( email )

2500 bd de l'Universite
Sherbrooke, Québec J1K 2R1
Canada

Pierre-Carl Michaud

HEC Montreal ( email )

3000, Chemin de la Côte-Sainte-Catherine
Montreal, Quebec H2X 2L3
Canada

Julien Navaux

HEC Montreal ( email )

3000, Chemin de la Côte-Sainte-Catherine
Montreal, Quebec H2X 2L3
Canada

Suzie St-Cerny

Université de Sherbrooke ( email )

2500 bd de l'Universite
Sherbrooke, Québec J1K 2R1
Canada

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