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Law and Public Policy

D07(a) - The Politics of Taxation

Date: Jun 4 | Time: 03:15pm to 04:45pm | Location: SWING 106

Chair/Président/Présidente : Peter Graefe (McMaster University)

Discussant/Commentateur/Commentatrice : Alain Noël (Université de Montréal)

The Presence of an Absence: Sales Tax as the Third Rail of Alberta Politics: Geoff Salomons (University of Alberta), Daniel Beland (Johnson Shoyama Graduate School of Public Policy)
Abstract: Alberta’s fiscal policy challenges are well known and often lamented. Politicians, election after election, express the need to get off the “revenue rollercoaster” yet resource revenue reliance remains firmly entrenched. What is even more extraordinary is that the Alberta government celebrates this dependence. In the 2018 budget, with an estimated deficit of $8.8B, the document celebrates that, if Alberta had taxes in place equivalent to the next lowest taxed province (B.C.), it would raise an additional $11.2B. This disconnect highlights very clearly the absence of one notable fiscal policy tool: a sales tax. Given the hesitance of the Premier Notley’s NDP to introduce a sales tax to address the fiscal challenges arising from the 2014 drop in oil prices, much larger political forces are in play. In this paper, we trace the emergence of Alberta’s resource revenue reliance back to Premier Lougheed, explore potential policy windows where a sales tax could have legitimately been introduced, and discuss the eventual rebranding of this reliance as the Alberta Advantage under Premier Klein. Combining the policy feedback and political culture literatures, we argue that the policy legacy of the lack of a sales tax has shaped expectations of Albertans for two generations and become fundamentally embedded within the Albertan political culture. The idea of a sales tax has become so anathema in Alberta politics that it is now referred to as the Third Rail of Alberta Politics.

A Public Policy Case Study of the Introduction of the Goods and Services Tax (GST) in Australia, Some Comparisons with Canada: John Alvey (University of Queensland)
Abstract: The goal of policy makers traditionally has been to achieve rational policy-making. However historical evidence indicates that political considerations and influences from various community interest groups in the end influence public policy decisions. The introduction of the Goods and Services Tax (GST) in Australia is examined in this paper, with some comparisons with Canada. This paper’s analysis focuses on three landmarks in the GST policy process that are used to demonstrate that in the decision-making process rationality re-emerged with each attempt at policy formulation and introducing the GST. A 30 year long policy process was required for the eventual introduction of the GST in Australia, this shows that in a longitudinal case study of the policy process the chances of it remaining purely rational is nearly impossible. The findings from this research demonstrate the iterative nature of the GST as a public policy in Australia and that the policy process oscillated from the rational comprehensive approach to an incremental approach then back again. The GST experience in Australia shows that tax reform can be successfully achieved but sometime after a few attempts over a long period of time. Lessons can be learnt from the Australian and Canadian experience for future change to Australia’s tax system.


Who Wants “Something for Nothing”?: Olivier Jacques (McGill University)
Abstract: Support for additional public spending is widespread in advanced industrial democracies. However, voters might want something for nothing: higher spending paid for by another group. For many voters, the preferred outgroup on which to shift the tax burden is high income citizens. Survey responses show that a majority of respondents think taxes on the rich are too low, but almost nobody thinks that taxes on the middle class are too low. This might be because most voters perceive themselves to be in the middle class, even if they are considerably richer than average. I analyze if pro-spending voters are willing to pay a higher tax burden themselves or if they want something for nothing. I test whether preferences for additional spending in specific policy areas are significant predictors of unwillingness to pay taxes and compare the preferences of pro-spending and anti-tax respondents (i.e. wanting lower taxes, but no cuts to spending) in order to see if wanting something for nothing is more prevalent on the left than on the right. To do so, I use the ISSP 2016 survey on the “role of government”. I find that among self-perceived middle-class voters, preferences for much more public spending is correlated with a higher likelihood of thinking that taxes on middle incomes are too high. This something for nothing preference is more likely for voters who want more social consumption than for those who want more social investment. In contrast, I find that anti-tax voters are more likely to prefer lower public