Home › Policy Articles: Fiscal & Budgetary: Tax Policy: Page 2

In this report, Mahmood Iqbal explores the issue of foreign direct investment, in light of its phenomenal growth in the past decade worldwide. Iqbal conducts a review of the literature regarding foreign direct investment and concludes the existing research has often used methodologies that are very dissimilar, and yet the overall findings around decision-making related to the foreign direct investment process, among other factors, are very similar. Iqbal cites three variables that he believes have always been identified as the main factors in determining the flow of foreign direct investment: resource endowment, market size, and agglomeration economics.

This article, by Shay Aba, Wolfe D. Goodman and Jack M. Mintz, builds the case for a new outlook regarding the funding for public health care in Canada – an outlook based on a “user-pay” system. The authors propose that payments be made based on the level of service use, using the existing income tax system as a model. In this vein, the more a citizen uses the health care system, the higher his or her contributions would be.

In this article Jenna Robbins and Michael R. Veall attempt to evaluate the revenues the Canadian government can expect to gain as a result of investors choosing to withdraw funds from their Registered Retirement Savings Plans (RRSPs) and Registered Pension Plans (RPPs). The authors point out that much of the debate about fiscal policy is framed by the debt, and too little attention given to rising assets. To “the asset side,” Veall and Robbins add what they estimate is around $200 billion of RRSP and RPP accumulations, which are rarely accounted for (as of 1999).

This alternative Saskatchewan budget, presented by the Canadian Centre for Policy Alternatives, focuses on three areas that the Centre considers undervalued: economic security, health services, and education.

Robin Banerjee and William B.P. Robson argue that Canada’s capital investment is lagging behind other OECD countries.

This Backgrounder by Shay Aba follows a seminar convened by the C.D. Howe Institute on February 1, 2002 pertaining to the themes of Canada’s “current and future economic conditions,” as well as “the roles of fiscal and monetary policy.” Those who attended the seminar called for moderate to average rates of growth, in concert with the downturn (at the time) in the global economy, and its anticipated recovery. With demand for stocks, and therefore stock prices, expected to rise, most attendees agreed that monetary policy, rather than fiscal policy, should be used to smooth out the business cycle.

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.

This article by Thomas J. Courchene analyzes Canada’s fiscal turnaround from its dire situation in the early 1990s (with the Wall Street Journal suggesting the Canadian dollar might “go the way” of the Mexican Peso, for example) to budgetary surplus.

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

According to the Canadian Centre for Policy Alternatives, the Nova Scotian provincial government underestimates its surpluses. This propensity for underestimation stifles debate on how public funds should be distributed, and thereby diminishes the opportunities available to improve services and infrastructure.

In this unrefereed working paper, Christian Lammert analyzes the impact of globalization on tax policy in welfare states.

The Universal Child Care Benefit (UCCB) is the Harper government’s first major social policy initiative since taking office. As the authors point out, UCCB has improved since its was first proposed as the Choice in Child Care Allowance. In their view, however, two serious flaws remain. According to Ken Battle, Sherri Torjman and Michael Mendelson, one flaw is that the UCCB will be taxable for the lower-earner parent in a couple and the lone parent in single-parent families. As a result, families with the same income but of a different type will receive different after-tax benefits. In the new program, single-parent families will end up with the smallest after-tax benefits. The other problem with the UCCB, the authors posit, is the abolishment of the $249 annual young child-care supplement that was part of the Canada Child Tax Benefit. Mainly low- and modest-income families used this supplement; in the authors view, its loss, along with the increase in taxable income, will make the distribution of net benefits unfair.

Analyzing the federal Conservative minority platform, the Canadian Centre for Policy Alternatives presents an alternative federal budget that honours commitments to prior parliamentary decisions (including child care, First Nations, cities and Kyoto), improves the lives of Canadians, and meets international obligations (including aid commitments)

In this economic note Valentin Petkantchin explores why Quebec has fewer entrepreneurs than other parts of Canada and the United States.

Sherri Torjman, Ken Battle and Michael Mendelson prepared this paper for the Finance Committee’s pre-Budget consultations. The authors present key principles they contend should guide the federal government’s spending of its surpluses, namely, transparency, balance, and purpose.

Robert L. Bish discusses the impact that property taxes can have on the number of new businesses that invest in a particular geographic area, as well as the success rate of those already situated in the jurisdiction.

Newly elected Premier Jean Charest stated that his government must lower taxes because the current load is hindering Quebec’s development. In this Economic Note the authors assess the size of the province’s tax burden and present a clear picture of the challenge awaiting the new government.

Steve Kerstetter’s report Rags and Riches: Wealth Inequality in Canada analyzes Statistics Canada data on the net worth (total assets minus total debts) of Canadians. Kerstetter’s report concludes that Canada has a deeply unequal distribution of personal wealth. His analysis compares personal wealth according to a number of different factors, including region, age, housing status, and education. Kerstetter finds that in 1999 the wealthiest 10 percent of Canadian family units had a combined 53 percent of the wealth, while the poorest 10 percent had negative average wealth. Perhaps more shocking, Kerstetter maintains, in the same year the wealthiest 50 percent of family units had 94.4 percent of Canadian personal wealth.

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.

This article by Jack M. Mintz and Thomas A. Wilson offers a plethora of suggestions meant to improve the Canadian retirement tax system, which they believe is outdated. Accordingly, they suggest some of the steps that should be taken include: raising the maximum annual Registered Retirement Savings Plan (RRSP) contributions allowance, and indexing RRSP contributions to inflation; giving all citizens access to the averaging of income over lifetimes; a change in the allowable age ceiling for RRSP contributions; a raise in annual percentage limits; and the ability to split Registered Retirement Plans (RRPs) between spouses.

In this report, Greg Flanagan examines the impact of privatization on Alberta’s liquor retail industry.

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.

Block and Russell present a challenge to the federal Conservative Party’s promise to “stand up for families,” suggesting that Conservative policy has resulted in a divide, with some families benefiting more than others.

Casey Vander Ploeg says the property tax debate has raged for years: proponents argue that property taxes are insufficient to meet the growing fiscal needs of today’s large cities; critics contend that property taxes are too high and are increasing the cost of living and doing business.

In this �Critical Issues Bulletin� Jason Clemens, Todd Fox, Amela Karabegovic, and Niels Veldhuis argue for the implementation of tax and expenditure limitation (TEL) laws across Canada.