Pub Date : 2022-07-01DOI: 10.32721/ctj.2022.70.2.fon
L. Godbout, Michael Robert-Angers
In this article, Luc Godbout and Michaël Robert-Angers assess whether the burden of taxation and the tax structures used to collect tax revenues are converging among member countries of the Organisation for Economic Co-operation and Development (OECD). After defining the concept of convergence and presenting a methodology for measuring the degree of similarity among tax systems, the authors apply that methodology to OECD data for the period 1981-2018 to examine convergence among 24 member countries and individually for each country relative to the OECD average. While the data indicate convergence for the majority of the 24 countries in terms of the burden of taxation and the way in which tax revenue is collected, Canada is not part of this trend.
{"title":"Finances of the Nation: Is There Tax Convergence Among OECD Countries?","authors":"L. Godbout, Michael Robert-Angers","doi":"10.32721/ctj.2022.70.2.fon","DOIUrl":"https://doi.org/10.32721/ctj.2022.70.2.fon","url":null,"abstract":"In this article, Luc Godbout and Michaël Robert-Angers assess whether the burden of taxation and the tax structures used to collect tax revenues are converging among member countries of the Organisation for Economic Co-operation and Development (OECD). After defining the concept of convergence and presenting a methodology for measuring the degree of similarity among tax systems, the authors apply that methodology to OECD data for the period 1981-2018 to examine convergence among 24 member countries and individually for each country relative to the OECD average. While the data indicate convergence for the majority of the 24 countries in terms of the burden of taxation and the way in which tax revenue is collected, Canada is not part of this trend.","PeriodicalId":375948,"journal":{"name":"Canadian Tax Journal/Revue fiscale canadienne","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2022-07-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"131937162","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2022-04-01DOI: 10.32721/ctj.2022.70.1.pf.editors
Frances R. Woolley, A. Macnaughton, Kevin Milligan, Daniel Sandler
Under the 2015 Paris Agreement, Canada is committed to reducing its greenhouse gas (GHG) emissions by 40 to 45 percent from 2005 levels by 2030.1 As of 2019, a full 4 years after the agreement was signed, Canada had achieved emission reductions of only 1 percent. [...]meeting our Paris commitments will require a 39 to 44 percent reduction in GHG emissions in just 11 years.2 To put into perspective the structural economic change required by a 39 to 44 percent cut in emissions, the changes that took place in 2020, the first year of the COVID-19 pandemic-working from home, eliminating most business and personal air travel, and so on-reduced Canada's carbon (CO2) emissions by 8 percent from 2019 levels.3 Meeting the Paris commitments would require Canadians to not only preserve 2020-level emissions, but also achieve three or four times that level of reductions by the end of the following decade. [...]the need for equalization is also reduced. Yet, because of the equalization program's "fixed-growth rule," the size of the program would not decline, even with a diminished need for equalization. [...]Snoddon concludes, "Overequalization often results, with Quebec and sometimes Ontario as the main beneficiaries. Christians suggests that to the extent that economists can estimate the amount of externalized environmental costs with increasing detail and precision, the income tax base could be legislatively reformed to deem such externalized costs to constitute additional taxable income to all of the relevant parties throughout the fossil fuel production and consumption cycle.16 Christians acknowledges that there are practical difficulties in estimating the environmental costs created by individual firms, especially given Canada's selfassessment-based income tax system.
{"title":"Policy Forum: Editors' Introduction—Cross-Border Issues in Carbon Pricing","authors":"Frances R. Woolley, A. Macnaughton, Kevin Milligan, Daniel Sandler","doi":"10.32721/ctj.2022.70.1.pf.editors","DOIUrl":"https://doi.org/10.32721/ctj.2022.70.1.pf.editors","url":null,"abstract":"Under the 2015 Paris Agreement, Canada is committed to reducing its greenhouse gas (GHG) emissions by 40 to 45 percent from 2005 levels by 2030.1 As of 2019, a full 4 years after the agreement was signed, Canada had achieved emission reductions of only 1 percent. [...]meeting our Paris commitments will require a 39 to 44 percent reduction in GHG emissions in just 11 years.2 To put into perspective the structural economic change required by a 39 to 44 percent cut in emissions, the changes that took place in 2020, the first year of the COVID-19 pandemic-working from home, eliminating most business and personal air travel, and so on-reduced Canada's carbon (CO2) emissions by 8 percent from 2019 levels.3 Meeting the Paris commitments would require Canadians to not only preserve 2020-level emissions, but also achieve three or four times that level of reductions by the end of the following decade. [...]the need for equalization is also reduced. Yet, because of the equalization program's \"fixed-growth rule,\" the size of the program would not decline, even with a diminished need for equalization. [...]Snoddon concludes, \"Overequalization often results, with Quebec and sometimes Ontario as the main beneficiaries. Christians suggests that to the extent that economists can estimate the amount of externalized environmental costs with increasing detail and precision, the income tax base could be legislatively reformed to deem such externalized costs to constitute additional taxable income to all of the relevant parties throughout the fossil fuel production and consumption cycle.16 Christians acknowledges that there are practical difficulties in estimating the environmental costs created by individual firms, especially given Canada's selfassessment-based income tax system.","PeriodicalId":375948,"journal":{"name":"Canadian Tax Journal/Revue fiscale canadienne","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2022-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"114309687","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2022-04-01DOI: 10.32721/ctj.2022.70.1.pfp
Lynn Wu, Maria Snelgrove, Chris Watt Bickley
Cet article vise à fournir un aperçu général des incidences fiscales et des considérations pratiques liées à la possession d'actifs de luxe à l'étranger. Les auteurs décrivent les types de propriété les plus courants et fournissent un cadre d'analyse présentant les divers facteurs à prendre en compte lors de l'examen des options s'offrant à un client. Enfin, les auteurs abordent les types courants d'actifs de luxe à usage personnel ainsi que les avantages et les risques qui influent sur le choix de la structure de propriété appropriée.
{"title":"Planification fiscale personnelle : La propriété d'actifs de luxe à l'étranger — Considérations fiscales","authors":"Lynn Wu, Maria Snelgrove, Chris Watt Bickley","doi":"10.32721/ctj.2022.70.1.pfp","DOIUrl":"https://doi.org/10.32721/ctj.2022.70.1.pfp","url":null,"abstract":"Cet article vise à fournir un aperçu général des incidences fiscales et des considérations pratiques liées à la possession d'actifs de luxe à l'étranger. Les auteurs décrivent les types de propriété les plus courants et fournissent un cadre d'analyse présentant les divers facteurs à prendre en compte lors de l'examen des options s'offrant à un client. Enfin, les auteurs abordent les types courants d'actifs de luxe à usage personnel ainsi que les avantages et les risques qui influent sur le choix de la structure de propriété appropriée.","PeriodicalId":375948,"journal":{"name":"Canadian Tax Journal/Revue fiscale canadienne","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2022-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"132244806","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2022-04-01DOI: 10.32721/ctj.2022.70.1.pf.boessenkool
Kenneth J. Boessenkool, Michael P Moffatt, A. Cosbey, M. Bernstein
For Canadian policy makers, the relatively straightforward economics of a border carbon adjustment (BCA) is complicated in practice by four challenges. First, Canadian carbon-pricing regimes have been developed from the bottom up, being primarily designed at the provincial rather than the federal level. Second, a Canadian BCA must comply with international trade law. Third, while carbon taxes are applied on the carbon emitted at each stage of every industrial process, applying a BCA on each process and at each level of a value chain is extremely difficult. Fourth, there is the question of what to do with any revenues that a BCA generates. The key conclusion that emerges from the discussion in this article is that the federal nature of Canada will be an early and significant challenge for policy makers. Given that Canadian provinces have led the development of carbon-pricing schemes, it seems likely that most will continue to want to do so. Any BCA regime (which will necessarily be implemented at the federal level) will have to find ways to accommodate or account for the differences in provincial carbon-pricing regimes. That accommodation may not be impossible, but it will not be easy.
{"title":"Policy Forum: Border Carbon Adjustments—Four Practical Challenges","authors":"Kenneth J. Boessenkool, Michael P Moffatt, A. Cosbey, M. Bernstein","doi":"10.32721/ctj.2022.70.1.pf.boessenkool","DOIUrl":"https://doi.org/10.32721/ctj.2022.70.1.pf.boessenkool","url":null,"abstract":"For Canadian policy makers, the relatively straightforward economics of a border carbon adjustment (BCA) is complicated in practice by four challenges. First, Canadian carbon-pricing regimes have been developed from the bottom up, being primarily designed at the provincial rather than the federal level. Second, a Canadian BCA must comply with international trade law. Third, while carbon taxes are applied on the carbon emitted at each stage of every industrial process, applying a BCA on each process and at each level of a value chain is extremely difficult. Fourth, there is the question of what to do with any revenues that a BCA generates. The key conclusion that emerges from the discussion in this article is that the federal nature of Canada will be an early and significant challenge for policy makers. Given that Canadian provinces have led the development of carbon-pricing schemes, it seems likely that most will continue to want to do so. Any BCA regime (which will necessarily be implemented at the federal level) will have to find ways to accommodate or account for the differences in provincial carbon-pricing regimes. That accommodation may not be impossible, but it will not be easy.","PeriodicalId":375948,"journal":{"name":"Canadian Tax Journal/Revue fiscale canadienne","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2022-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"115421120","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2022-04-01DOI: 10.32721/ctj.2022.70.1.pf.christians
Allison Christians
Canada's federal carbon-pricing scheme and its subnational counterparts might not be sufficient to meet the target of net zero by 2050. In the meantime, carbon dioxide (CO2) emitters are allowed to profit by externalizing environmental costs and risks on to present and future taxpayers. When the income tax ignores these externalities, it implicitly subsidizes CO2-intensive activities relative to less harmful alternatives. In examining our carbon tax policy options, we ought to consider whether the externalization problem could be addressed within the income tax to ensure that the income tax system assists, rather than undermines, the net zero pledge.
{"title":"Policy Forum: Cross-Border and Multijurisdictional Issues in Carbon Taxation—Carbon Pricing and the Income Tax","authors":"Allison Christians","doi":"10.32721/ctj.2022.70.1.pf.christians","DOIUrl":"https://doi.org/10.32721/ctj.2022.70.1.pf.christians","url":null,"abstract":"Canada's federal carbon-pricing scheme and its subnational counterparts might not be sufficient to meet the target of net zero by 2050. In the meantime, carbon dioxide (CO2) emitters are allowed to profit by externalizing environmental costs and risks on to present and future taxpayers. When the income tax ignores these externalities, it implicitly subsidizes CO2-intensive activities relative to less harmful alternatives. In examining our carbon tax policy options, we ought to consider whether the externalization problem could be addressed within the income tax to ensure that the income tax system assists, rather than undermines, the net zero pledge.","PeriodicalId":375948,"journal":{"name":"Canadian Tax Journal/Revue fiscale canadienne","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2022-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"121975971","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2022-04-01DOI: 10.32721/ctj.2022.70.1.ozai
Ivan Ozai
Policy makers worldwide have increasingly considered the adoption of a carbon adjustment at the border to equalize carbon pricing on foreign goods with carbon policies imposed on domestic production. The implementation of a border carbon adjustment (BCA) in the European Union has been recently proposed by the European Commission, followed by similar plans in the United States and Canada, as an instrument designed to address concerns about competitiveness and emissions leakage resulting from the absence of a global price on carbon or an internationally coordinated carbon-pricing system. Despite its potential to address these issues, the implementation of a BCA raises concerns with respect to its impact on developing countries. A BCA will likely impose a disproportionate burden on developing countries with limited capacity to cut back emissions and thus violate the principle of common but differentiated responsibilities (CBDR) established in the United Nations Framework Convention on Climate Change. The main goal of this article is to examine CBDR's normative requirements and determine its legal implications for BCA design. The article further offers policy guidelines for implementing a CBDR-compliant BCA that addresses its ultimate purpose of reducing global greenhouse gas emissions while also supporting the development needs of less affluent countries.
{"title":"Designing an Equitable Border Carbon Adjustment Mechanism","authors":"Ivan Ozai","doi":"10.32721/ctj.2022.70.1.ozai","DOIUrl":"https://doi.org/10.32721/ctj.2022.70.1.ozai","url":null,"abstract":"Policy makers worldwide have increasingly considered the adoption of a carbon adjustment at the border to equalize carbon pricing on foreign goods with carbon policies imposed on domestic production. The implementation of a border carbon adjustment (BCA) in the European Union has been recently proposed by the European Commission, followed by similar plans in the United States and Canada, as an instrument designed to address concerns about competitiveness and emissions leakage resulting from the absence of a global price on carbon or an internationally coordinated carbon-pricing system. Despite its potential to address these issues, the implementation of a BCA raises concerns with respect to its impact on developing countries. A BCA will likely impose a disproportionate burden on developing countries with limited capacity to cut back emissions and thus violate the principle of common but differentiated responsibilities (CBDR) established in the United Nations Framework Convention on Climate Change. The main goal of this article is to examine CBDR's normative requirements and determine its legal implications for BCA design. The article further offers policy guidelines for implementing a CBDR-compliant BCA that addresses its ultimate purpose of reducing global greenhouse gas emissions while also supporting the development needs of less affluent countries.","PeriodicalId":375948,"journal":{"name":"Canadian Tax Journal/Revue fiscale canadienne","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2022-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"126838729","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2022-04-01DOI: 10.32721/ctj.2022.70.1.pf.snoddon
Tracy R. Snoddon
The federal government intends to increase its minimum carbon tax from $40 per tonne of carbon emissions to $170 per tonne by 2030. The carbon tax increase will have uneven and potentially large impacts on provincial emissions and carbon tax revenue, but little is known about how decisions to recycle these revenues will affect equalization payments to provinces. This article compares baseline equalization payments with simulated payments under various revenue-recycling scenarios given a $170 minimum carbon tax. The simulations demonstrate that recycling carbon tax revenues with offsetting reductions in provincial personal or business income taxes, for example, lowers overall disparities in provincial governments' revenue-raising abilities and reduces the size of the equalization program needed to address these disparities. The article draws attention to an already controversial design feature of the program, the fixed-growth rule. The simulations show that the fixed-growth rule limits the impact of higher carbon tax revenues on equalization, by adjusting payments to ensure that the overall size of the program grows roughly in line with the economy. As a result, any potential savings in aggregate equalization payments from revenue recycling are not realized. The distribution of payments is also affected by the fixed-growth rule. Overequalization often results, with Quebec and sometimes Ontario as the main beneficiaries.
{"title":"Policy Forum: Carbon Taxes and Fiscal Federalism in Canada—A New Wrinkle to an Old Problem","authors":"Tracy R. Snoddon","doi":"10.32721/ctj.2022.70.1.pf.snoddon","DOIUrl":"https://doi.org/10.32721/ctj.2022.70.1.pf.snoddon","url":null,"abstract":"The federal government intends to increase its minimum carbon tax from $40 per tonne of carbon emissions to $170 per tonne by 2030. The carbon tax increase will have uneven and potentially large impacts on provincial emissions and carbon tax revenue, but little is known about how decisions to recycle these revenues will affect equalization payments to provinces. This article compares baseline equalization payments with simulated payments under various revenue-recycling scenarios given a $170 minimum carbon tax. The simulations demonstrate that recycling carbon tax revenues with offsetting reductions in provincial personal or business income taxes, for example, lowers overall disparities in provincial governments' revenue-raising abilities and reduces the size of the equalization program needed to address these disparities. The article draws attention to an already controversial design feature of the program, the fixed-growth rule. The simulations show that the fixed-growth rule limits the impact of higher carbon tax revenues on equalization, by adjusting payments to ensure that the overall size of the program grows roughly in line with the economy. As a result, any potential savings in aggregate equalization payments from revenue recycling are not realized. The distribution of payments is also affected by the fixed-growth rule. Overequalization often results, with Quebec and sometimes Ontario as the main beneficiaries.","PeriodicalId":375948,"journal":{"name":"Canadian Tax Journal/Revue fiscale canadienne","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2022-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"127952444","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2022-04-01DOI: 10.32721/ctj.2022.70.1.ctp
Nicholas J. McIsaac
In the Canadian mining industry, it may be commercially beneficial for two or more corporations to undertake a business venture together to explore a resource property and subsequently develop and operate a mine. Four vehicles are commonly used to carry on such ventures: incorporated joint ventures, unincorporated joint ventures, general partnerships, and limited partnerships. This article highlights some of the income tax issues that must be considered when negotiating a choice of vehicle with an arm's-length party. The article focuses on key provisions of the Income Tax Act (Canada) that apply in the context of resource business ventures including, in particular, the flowthrough share, successor, at-risk, and tax shelter investment rules. The relevance and tax implications of these provisions are discussed, in turn, for each of the four vehicles, with a view to assisting the parties to the venture in making an informed decision.
{"title":"Corporate Tax Planning: Choosing a Vehicle for Resource Business Ventures","authors":"Nicholas J. McIsaac","doi":"10.32721/ctj.2022.70.1.ctp","DOIUrl":"https://doi.org/10.32721/ctj.2022.70.1.ctp","url":null,"abstract":"In the Canadian mining industry, it may be commercially beneficial for two or more corporations to undertake a business venture together to explore a resource property and subsequently develop and operate a mine. Four vehicles are commonly used to carry on such ventures: incorporated joint ventures, unincorporated joint ventures, general partnerships, and limited partnerships. This article highlights some of the income tax issues that must be considered when negotiating a choice of vehicle with an arm's-length party. The article focuses on key provisions of the Income Tax Act (Canada) that apply in the context of resource business ventures including, in particular, the flowthrough share, successor, at-risk, and tax shelter investment rules. The relevance and tax implications of these provisions are discussed, in turn, for each of the four vehicles, with a view to assisting the parties to the venture in making an informed decision.","PeriodicalId":375948,"journal":{"name":"Canadian Tax Journal/Revue fiscale canadienne","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2022-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"115788628","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2022-04-01DOI: 10.32721/ctj.2022.70.1.ptp
Lynn Wu, Maria Snelgrove, Chris Watt Bickley
This article aims to provide a general understanding of the tax implications and practical considerations associated with the ownership of foreign luxury assets. The authors outline common forms of ownership and provide a sample analytical framework, setting out the various factors to be considered in reviewing a client's ownership options. They also discuss common types of personal-use luxury assets, and the benefits and risks affecting the choice of an appropriate ownership structure.
{"title":"Personal Tax Planning: Ownership of Foreign Luxury Assets—Tax Considerations","authors":"Lynn Wu, Maria Snelgrove, Chris Watt Bickley","doi":"10.32721/ctj.2022.70.1.ptp","DOIUrl":"https://doi.org/10.32721/ctj.2022.70.1.ptp","url":null,"abstract":"This article aims to provide a general understanding of the tax implications and practical considerations associated with the ownership of foreign luxury assets. The authors outline common forms of ownership and provide a sample analytical framework, setting out the various factors to be considered in reviewing a client's ownership options. They also discuss common types of personal-use luxury assets, and the benefits and risks affecting the choice of an appropriate ownership structure.","PeriodicalId":375948,"journal":{"name":"Canadian Tax Journal/Revue fiscale canadienne","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2022-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"124137084","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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