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

Richard Bird and Michael Smart ()
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Michael Smart: Department of Economics, University of Toronto

Canadian Tax Journal, 2016, vol. 64, issue 2, 417-442

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 (search for similar items in EconPapers)
Date: 2016
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