POLS 205 Lecture Notes - Fiscal Imbalance, Fiscal Federalism, Indirect Tax
Document Summary
Perhaps it"s because a divisive issue as provinces require different amounts of money, and can alienate people in other provinces. Vertical fiscal balance when both governments have enough revenue to carry out their responsibilities. The federal government usually has more money: we have a vertical fiscal imbalance. Direct taxation: directly to corporations and/or consumers, was not the biggest income source for the feds. Indirect taxation: tariffs, many economists have decided that sales tax should be considered indirect tax. Court challenges have resulted in the allowance of provincial sales taxes. Third goal for fiscal federalism: to coordinate tax areas. Three goals of fiscal federalism: achieve vertical fiscal balance. Tax cuts, royalties: coordinate taxation areas.