Taxes, Volatility, and Resources in Canadian Provinces
Tax policy often breeds controversy, especially when rate changes are motivated by volatile resource sectors. This article examines how provincial tax policies respond to changes in resource revenues. Specifically, it (a) estimates the tax-resource elasticity of Canadian provinces and (b) measures t...
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Online Access: | https://doi.org/10.3138/cpp.2015-068 |
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ftrepec:oai:RePEc:cpp:issued:v:42:y:2016:i:4:p:469-481 2024-04-14T08:15:07+00:00 Taxes, Volatility, and Resources in Canadian Provinces Brandon Schaufele https://doi.org/10.3138/cpp.2015-068 unknown http://dx.doi.org/10.3138/cpp.2015-068 article ftrepec https://doi.org/10.3138/cpp.2015-068 2024-03-19T10:37:35Z Tax policy often breeds controversy, especially when rate changes are motivated by volatile resource sectors. This article examines how provincial tax policies respond to changes in resource revenues. Specifically, it (a) estimates the tax-resource elasticity of Canadian provinces and (b) measures the resource sector's contribution to the volatility of provincial gross domestic product (GDP). Empirical results suggest that a $1,000 decrease in per capita resource revenue leads to a 150 basis point increase in a province's marginal personal income tax rate and a 3 percent increase in excise taxes on gasoline. A variance decomposition demonstrates that resource-induced volatility accounts for 76.2, 50.8, and 42.1 percent of the variance of the first-differenced GDP of, respectively, Newfoundland and Labrador, Alberta, and Saskatchewan. Article in Journal/Newspaper Newfoundland RePEc (Research Papers in Economics) Newfoundland Canadian Public Policy 42 4 469 481 |
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Open Polar |
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RePEc (Research Papers in Economics) |
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Tax policy often breeds controversy, especially when rate changes are motivated by volatile resource sectors. This article examines how provincial tax policies respond to changes in resource revenues. Specifically, it (a) estimates the tax-resource elasticity of Canadian provinces and (b) measures the resource sector's contribution to the volatility of provincial gross domestic product (GDP). Empirical results suggest that a $1,000 decrease in per capita resource revenue leads to a 150 basis point increase in a province's marginal personal income tax rate and a 3 percent increase in excise taxes on gasoline. A variance decomposition demonstrates that resource-induced volatility accounts for 76.2, 50.8, and 42.1 percent of the variance of the first-differenced GDP of, respectively, Newfoundland and Labrador, Alberta, and Saskatchewan. |
format |
Article in Journal/Newspaper |
author |
Brandon Schaufele |
spellingShingle |
Brandon Schaufele Taxes, Volatility, and Resources in Canadian Provinces |
author_facet |
Brandon Schaufele |
author_sort |
Brandon Schaufele |
title |
Taxes, Volatility, and Resources in Canadian Provinces |
title_short |
Taxes, Volatility, and Resources in Canadian Provinces |
title_full |
Taxes, Volatility, and Resources in Canadian Provinces |
title_fullStr |
Taxes, Volatility, and Resources in Canadian Provinces |
title_full_unstemmed |
Taxes, Volatility, and Resources in Canadian Provinces |
title_sort |
taxes, volatility, and resources in canadian provinces |
url |
https://doi.org/10.3138/cpp.2015-068 |
geographic |
Newfoundland |
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Newfoundland |
genre |
Newfoundland |
genre_facet |
Newfoundland |
op_relation |
http://dx.doi.org/10.3138/cpp.2015-068 |
op_doi |
https://doi.org/10.3138/cpp.2015-068 |
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Canadian Public Policy |
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42 |
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4 |
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469 |
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481 |
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1796313377830600704 |