Taxation in a Sub-National Jurisdiction

David Robinson is an economics professor and dean of the Faculty of
Social Sciences at Laurentian University.

Tax Commissions are among the least appreciated cultural events. The
Report of the Ontario’s Fair Tax Commission will be quoted for years
to come, and may influence the lives of millions. It should be on the
shelf of any Canadian interested in tax reform, government, or politics.
Furthermore, in publishing the Research Studies, the Commission has left
a legacy that does not depend on whether its recommendations pass into
law. Compared to almost any public-finance text on the market, this work
is well written, covering politically and economically tricky issues
clearly and in an astonishingly levelheaded way. It makes 135
recommendations that will be on provincial and federal agendas for years
to come.

The research volumes contain revised versions of commissioned studies
that are collections of interest in their own right. The first includes
five essays on taxation in a federal system. The second deals with
process: how and why taxes are chosen. The studies combine knowledge
about the way things are and how they got that way with insights
extracted from decades of research. They are not really light reading,
but they manage to distil a difficult and scattered literature without
the dubious ornament of equation or graph. They also provide a valuable
set of references, especially to the Canadian literature.

The authors are among the most respected economists in the field.
Topics include tax equity with multiple jurisdictions, the distribution
of power to tax and spend in a federal state, federal- provincial tax
collection agreements, the cost for taxpayers of a separate income tax
system for Ontario, and the capacity of provincial governments to smooth
the business cycle. Other studies examine budget secrecy and pre-budget
consultation in Ontario, survey tax expenditures (tax theory’s
equivalent of the Passover), and anatomize earmarked taxes. Each essay
makes clear policy recommendations.

Taxes matter, and these volumes tell us a lot about how to improve the
system. Not everyone will read these books, but everyone should insist
that aspiring provincial politicians read every essay and all of the
Commission, report. The standard of debate has risen.