Some Basic Facts about Government Expenditures and Taxation in Canada. Econ 525

Transcription

1 Some Basic Facts about Government Expenditures and Taxation in Canada Econ 525

2 Revenues and Expenditures in Canada Since we re studying the role of government in this course it is worth considering some measures of government activity How big is government? What does government spend money on? How does it collect taxes? At what level of government do different activities occur? How does Canada compare to other countries? What are trends in government size?

3 Where does what get done? As you think about any policy in this course, one question you should ask is Which level of government should do this? e.g. Does it make sense for businesses to be taxed at the local level? Should the federal government decide where to site a local park? Should local government handle redistribution? Management of externalities? Should local schools be funded locally? Or provincially? Answers to these questions can be complex

4 Why do certain activities occur at certain levels of government? Often an interesting question Subject of research on fiscal federalism As we ll see Externalities and public goods often best handled by higher levels of government Redistribution best handled by higher levels of government Local governments may better cater to specific demands of local population Legal constraints play role

5 Other interesting questions Why do different countries do things differently? e.g., some rely much more heavily on consumption taxes than income taxes Some have larger social insurance system What do effective *systems* of government look like? e.g., combinations of taxes or expenditure programs within and across levels of government.

6 Some General Trends Revenues Federal revs come primarily from income and consumption taxes Provincial revs come primarily from income taxes, consumption taxes, and federal transfers Local revs come primarily from property taxes

7 Some General Trends Expenditures Federal spending high on protection of persons and property, health, social services, and transfers to provinces Little direct Federal spending on education Provincial spending high on health, social services, and education Spending on health and social services encouraged by large federal grants Local spending high on protection, education, transportation, and environment Little spending on social services

8 Share of Total Government Expenditures, 2008 Federal Provincial and Territorial Local

9 Share of Total Government Revenue, 2008 Federal Provincial and Territorial Local

10 Consolidated Federal, Provincial, and Territorial Expenditures by Category (% total expenditures, 2009) General government services Protection of persons and property Transportation and communication Health Social services Education Resource conservation and industrial development Environment Recreation and culture Foreign affairs and international assistance Debt charges Other

11 Consolidated Federal Provincial and Territorial Revenue by Source (% total revenues, 2009) Income taxes Property and related taxes Consumption taxes Health insurance premiums Contributions to social security plans Other taxes Sales of goods and services Investment income Other revenue from own sources

12 Federal Expenditures by Source (% total expenditures, 2009) General government services Protection of persons and property Health Social services Education Resource conservation and industrial development Foreign affairs and international assistance General purpose transfers Debt charges Other

13 Federal Revenue by Source (% total revenue, 2009) Income taxes Consumption taxes Other taxes Contributions to social security plans Sales of goods and services Investment income Other revenue sources

14 Provincial Revenues by Source (% total revenues, 2009) Income taxes Consumption taxes Property and related taxes Other taxes Contributions to social security plans Sales of goods and services Investment income Other revenue from own sources General purpose transfers Specific purpose transfers

15 Provincial Expenditures by Category (% total expenditures, 2009) General government services Protection of persons and property Transportation and communications Health Social services Education Resource conservation and industrial development Debt charges Other

16 Local Government Revenues by Source (% total revenues, 2008) Consumption taxes Property and related taxes Other taxes Sales of goods and services Investment income Other revenue from own sources General purpose transfers Specific purpose transfers

17 Local Government Expenditures by Category (% total expenditures, 2008) General government services Protection of persons and property Transportation and communication Social services Education Environment Recreation and culture

18 General Government Expenditure (all levels) as % GDP 70% 60% 50% 40% 30% 20% 10% 0% Sweden Hungary Italy Finland Portugal Germany Czech Republic Greece Norway Canada Spain United States Australia Switzerland Mexico OECD (or closest year available) 1995

19 Deficit as a % of GDP Canada Japan United Kingdom United States Euro area (15 countries) OECD-Total

20 Central Govt Debt as a % of GDP Canada France Germany Greece Japan United Kingdom United States

21 Is Government Bigger in Canada than in US? While it s commonly assumed that Canada has bigger government than the US, this point is disputed Ferris and Winer (2007) argue that cross-country differences in national income and product accounting drive much of the apparent difference between Canada and the US They argue that as of 2004 (the end of their data series) the size of government relative to GDP was approximately the same for the two countries. After making appropriate adjustments to the data

22 How Provinces Raise Revenue

23 Revenues 2011/12: 41.3 billion BC s Revenue Sources

24 BC expenditures 2011/ billion