The Politics of Taxation in Canada

"This is a fascinating and timely book on a topic that has attracted too little serious attention.... It should help lead the way to both better politics and better tax policy in the future." - Jim Davies, University of Western Ontario

The balancing of government budgets after years of chronic deficits has reopened public debates over tax levels, the size of government and proposals for tax reform. The Politics of Taxation in Canada explains the factors that have shaped the evolution of Canada's tax system since the 1960s and the issues that are likely to challenge governments in coming years. It outlines the nature and objectives of Canada's tax system, the organizational and institutional structures that define and control it, and the political processes that enable politicians to manage policy changes—subject to competing pressures from voters and organized interest groups.

Political scientist Geoffrey Hale describes the major elements of Canada's tax system as parts of an "economic constitution" that affects the daily lives of Canadians as much as the political constitution that defines the powers and limits of governments and the rights of citizens. The principles of Canada's tax system reflect a loose and evolving political consensus on social and economic priorities. Hale suggests that to be politically and economically workable, proposals for major tax changes "must begin with the tax system as it is, not as we might wish it to be in the best of all possible worlds."

Contents 5 Acknowledgements 7 List of Tables and Appendices 9 ONE. Introduction 13 PART I. THE CONTEXT OF CANADA'S TAX SYSTEM 37 TWO. The Tax System and the Politics of Ideas 37 THREE. The Tax System as Economic Constitution 63 FOUR. The Tax Policy Community: Institutions and Processes 91 FIVE. The Public Tax Policy Process: Agenda-Setting, Interest Groups, and Public Opinion 113 PART II. THE POLITICS OF TAXATION FROM CARTER TO MARTIN 135 Introduction 135 SIX. The Tax Reform Pendulum: The Politics of Taxation during the Trudeau Era 145 SEVEN. The Mulroney Legacy: Tax Reform, Free Trade, and the Deficit Trap 181 EIGHT. The Politics of Sales Tax Reform 207 NINE. Chretien, Martin, and the Politics of Deficit Reduction 225 PART III. THE POLITICS OF TAXATION IN THE TWENTY-FIRST CENTURY-BALANCING NATIONAL, REGIONAL, AND GLOBAL PRESSURES 251 Introduction 251 TEN. Living Standards and the Politics of Personal Taxation 261 ELEVEN. Globalization, Domestic Politics, and Business Taxation 293 TWELVE. Taxation, Federalism, and the Provinces 321 THIRTEEN. Taxation, the Family, and Civil Society 341 Conclusion: The Politics of Taxation and the New Economy 367 Glossary 373 Selected Bibliography 379 Index 395