CALGARY, Nov. 7, 2013 /CNW/ - There is plenty of debate over how much
government should tax corporations. One populist viewpoint is that a
shift of the tax burden towards companies will mean average citizens
pay less. However, a report published today by The School of Public
Policy demonstrates that this scenario isn't likely to happen.
Authors Bev Dahlby, Ergete Ferede and Ebenezer Adjei examine tax rate
adjustments by the provincial governments from 1973 to 2010 to
determine trends in timing and amplitude.
"Provinces tend to change their personal and corporate income tax rates
in the same direction," the authors write.
The authors argue that a government's fiscal position dictates whether
it will raise or lower taxes either on corporations or individuals.
Therefore, if a government is in a fiscal pinch, it is more likely to
raise taxes, and it will apply increases to both corporate and personal
Another finding is that provinces tend to follow the lead of
neighbouring provinces when it comes to cuts to both personal and
corporate rates. People and businesses are mobile and therefore will
seek more tax-friendly jurisdictions. Provinces realize this principle
and appear to react to rate drops accordingly.
The full report and an accompanying communiqué can be found at www.policyschool.ucalgary.ca/publications
SOURCE: The School of Public Policy - University of Calgary
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