Reductions in taxes on investment are more effective than reductions in taxes on consumption
Source: Canada, Department of Finance, “Taxation and Economic Efficiency: Results from a General Equilibrium Analysis” in Tax Expenditures and Evaluations.
*The revenue losses from reductions in specific taxes are matched through an increase in lump-sum taxation.
**The economic well-being gain for Capital Cost Allowances represents the gain from increasing the Capital Cost Allowance in line with economic depreciation.
*The revenue losses from reductions in specific taxes are matched through an increase in lump-sum taxation.
**The economic well-being gain for Capital Cost Allowances represents the gain from increasing the Capital Cost Allowance in line with economic depreciation.
Quick Fact
Reductions in taxes on investment are more effective than reductions in taxes on consumption
Report on Canada 2007 | Pages 38-39
Taxes on existing business capital are particularly damaging to investment, because they are levied even if the business is not profitable. Few other advanced economies levy business capital taxes. While the federal government has eliminated its corporate capital tax in 2006; six of the provinces have capital taxes on non-financial corporations.
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