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Fiscal Policies and Regional Development in Canada by François Vaillancourt Belem August 31st,2005

Fiscal Policies and Regional Development in Canada by François Vaillancourt Belem August 31st,2005. Brief presentation of Canada Fiscal policies-Federal Fiscal policies-Provincial. Introduction-Outline. Canada T1-T3. Differences between provinces In size In income In autonomy

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Fiscal Policies and Regional Development in Canada by François Vaillancourt Belem August 31st,2005

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  1. Fiscal Policies and Regional Development in Canada byFrançois VaillancourtBelemAugust 31st,2005

  2. Brief presentation of Canada Fiscal policies-Federal Fiscal policies-Provincial Introduction-Outline

  3. Canada T1-T3 • Differences between provinces • In size • In income • In autonomy • In linguistic composition- mobility issue

  4. Overall federal transfers-T4 Ontario as Have –Not Province:-20-25 billions;2005 issue

  5. Overall transfers: Revenues • Port cities do not pay customs duties that are collected on shipments in transit. • Those who live near a excise taxpayer do not pay the excise taxes it remits to the government. • Residents of the region in which a company’s headquarters is located do not pay all the taxes that company pays.

  6. Overall transfers: Spending • Are benefits equal to costs? • How does one allocate the benefits of public goods? • Are all the benefits (as measured by the cost of the project) received by nearby residents? • Do the benefits of expenditures on public sector activities accrue to those who receive incomes or to those who receive the services provided?

  7. Programs • Canadian Health Social Transfer • Equal per capita transfer • Tax points+ unequal cash transfer • Unemployment insurance • No experience rating • More generous in regions with higher unemployment • Equal per capita Old Age Pension+ Income adjusted for poor

  8. Canadian evidence-3:Programs • Equalisation RTS system Centrally funded • Representative provinces(5) standard • 33 revenues sources considered

  9. Specific Programs-T5

  10. Missing items • Non-cash issues • Tax expenditures-T6 • Regulatory mandated spending –T7 • Natural resources pricing/ access to markets -100$ oil: the Alberta issue

  11. Transfers to businesses-T8 • National programs with regional impacts • Export help:EDC+Canada account + • Technology Partnership Canada-TPC =

  12. Transfers with regional aim-T9 • Implicit TPC: • Order:A-Q-O-W • Explicit ACOA to WDA

  13. Provincial tax policies-T10 • Full freedom to set: • Base • Rates • Collection activities • Some harmonisation observed • Differences in use of payroll and capital taxes

  14. Provincial Spending-T11-12 • Alberta/Ontario advantage VS • Québec ‘dirigisme’ or NB telecom • Impact of US states policies-Ontario automotive industry 500M$ • Electricity:availability/rates

  15. Conclusion • Not much federal direct intervention:many programs with regional impacts • Diverse provincial policies reflecting mobility/location/endowments • Issue of productivity becoming key: • Sharing oil wealth could be used for development

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