Home › Policy Articles: Fiscal & Budgetary: Tax Policy: 2005

Michael Mendelson studies the child benefits provided by the federal government to Canadian families.

The Alberta government’s 2005 budget will be the first since the provincial debt was eliminated. According to the Parkland Institute’s Committee on Alberta’s Finances, this budget should lay the foundations for a vision to build a socially sustainable and equitable economy.

In 2005, the federal government’s mini-budget contained a Working Income Tax Benefit proposal that would give low-income earners a cash supplement to bolster their wages. Ken Battle and Michael Mendelson welcome this proposal, arguing that it could help reduce poverty and remove barriers to employment.

In this Working Paper Bev Dahlby discusses fiscal imbalances on three levels: she defines vertical fiscal imbalances as those between two tiers of government; horizontal imbalances are those that exist across a single tier of government; structural imbalances occur in the tax and expenditure ‘mix.’ The author considers each of these issues in turn.

The Technical Advisory Committee on Tax Measures for Persons with Disabilities was appointed in 2003. The Committee’s mandate was to recommend how the federal government could improve the treatment of persons with disabilities under the income system.

Sherri Torjman suggests the 2005 federal budget will be remembered for the drama surrounding it and for the big-ticket items such as child care, cities and environmental technologies.

Armine Yalnizyan authors this yearly report from Social Watch, a civil society research and monitoring initiative developed to examine the work of governments in eradicating poverty and reducing inequality.

In this short Working Paper Michael Smart discusses federal transfer payments in Canada and suggests large-scale changes to the system are required. Smart points to the use of bilateral fiscal agreements; he considers them to be unstable, ad hoc solutions to the problem of meeting the disparate needs of Canada’s various provinces. In Smart’s view, this use of “chequebook federalism” has led to a destabilization of Canada’s public finances.

In this paper Jason Clemens and Niels Veldhuis discuss, as they describe it, the ‘tax barrier’ that is deterring small businesses from large-scale growth. As Clemens and Veldhuis explain, when businesses grow to what is defined as “small” (income greater than $300,000 to $450,000 depending on location) they encounter a large increase in income tax rates. The authors contend this drastic increase encourages companies to limit their growth potential to avoid high income tax rates.

One argument for repaying Canada’s debt sooner rather than later is the need to be fair to future generations.

This working paper by Kenneth McKenzie discussed the way that the political economy of fiscal federalism has been viewed in the past as well as more recently. He agues that concerns over vertical fiscal imbalances and fiscal accountability would be best resolved through increasing the provinces'' ability to tax rather than relying on federal transfer payments. The author contends that although this will not eliminate fiscal imbalance concerns it would rebalance the system.

In this Commentary Finn Poschmann and Stephen Tapp discuss the need to close the gap between the federal government’s revenue capacity and the provinces spending needs. They argue that the need for large federal transfers causes confusion in terms of jurisdiction and accountability. To alleviate this concern then Poschmann and Tapp suggest increasing the revenue building capacity of the provinces by shifting more taxing responsibilities to the provinces. Poschmann and Tapp then evaluate the different methods for shifting tax responsibilities to the provinces.

In this brief report Neil Brooks attacks the idea of Tax Freedom Day as being unrealistic and misleading.

Jack Mintz, Duanjie Chen, Yvan Guillemette and Finn Poschmann discuss the tax scheme in Canada and argue that it is ineffective in encouraging savings and attracting capital investment. The report breaks down tax system in each province and ranks them in terms of the investment environment they create. The authors point out that Canada has the second highest effective tax rate on capital among 36 industrial and leading development countries. Mintz, Chen, Guillemette and Poschmann that only through addressing these issues can Canada achieve better economic growth.

In this paper Keith Horner analyzes the concept of a registered disability savings plan (RDSP), formulated by the Planned Lifetime Advocacy Network (PLAN).

The Planned Lifetime Advocacy Network (PLAN) has proposed a disability savings plan that would achieve three objectives: it would provide a savings mechanism for persons with disabilities and their families to enhance self-sufficiency and living standards; it would develop a new partnership between families and governments; and it would ensure Canadian families have tools to plan for when they cannot care for family members with disabilities.

Canada is one of the few countries to tax corporate capital. Federally this capital tax affects all large corporations with financial institutions playing higher rates.

This Working Paper by Finn Poschmann examines the tensions that surround fiscal federalism and intergovernmental programs. As Poschmann explains, there are clear differences in the ability of the Canadian provinces to deliver public services at comparable tax rates. In this context, the need for federal assistance in the key areas of health care, education, and welfare is apparent, given the inability of some provinces to raise sufficient capital.

This paper is based on a presentation by Brian Lee Crowley and Bruce Winchester to the Subcommittee on Fiscal Imbalance of the Standing Committee on Finance. According to Crowley and Winchester, commentators and provincial governments contend that a fiscal imbalance exists between Ottawa and the provinces: a mismatch between what the two levels of government are called to do under the Constitution, and the fiscal resources they enjoy to carry out those responsibilities.

In this report, Stinson, Pollak and Cohen examine the extensive privatization of health support services in British Columbia since 2003. In particular, they examine the experiences of 24 workers in the cleaning and food services areas whose jobs were newly privatized. The authors argue that workers in these positions are usually women with children; many are immigrants of colour who also support family members abroad.

According to Pierre J. Jeanniot, the Canadian government is considering greater liberalization in the country’s airline industry in line with the current international trend toward open markets in aviation.