Vol.
22 No. 2 June 1996
Articles:
A
Fiscal Need Approach to Equalization
Anwar
Shah
The
existing fiscal equalization program in Canada attempts to equalize
per capita tax burden alone and completely ignores the expenditure
side. This paper examines the consequences of this neglect both conceptually
as well as empirically. The paper concludes that a program of equalization
that ignores the expenditure side cannot be defended on economic efficiency
and equity grounds.
Further,
such a program might not be consistent with the constituional intent
of equalization in Canada. The paper argues that the present system
of equalization in Canada could be improved by explicitly recognizing
relative expenditure needs of the Canadian provinces in the formula.
The paper implements an objective methodology for measuring these
needs and provides tentative calculations based on the proposed approach.
The paper concludes that a fiscal needs based program of equalization
would differ greatly from the present program in terms of its redistributive
impact and further that under such a program the tota amount of equalization
transfers made by the Federal Government might also be reduced.
Hardly a Quick Fix: Casino Gambling in Canada
Lennart E. Henriksson
Casino
gambling is proliferating in Canada despite evidence that its ability
to generate net increases in tax revenues and employment is uncertain.
This paper reviews the principal costs and benefits that are relevant
in evaluations of casino proposals, along with pertinent literature.
Principal recommendations include more scholarly cost-benefit studies.
A regulatory strategy and public consultation are also essential,
although the difficulties associated with both should always be recognized.
All in all, the casino's usefulness as a policy instrument appears
to be marginal.
Collective Models of Family Behaviour: Implications for Economic
Policy
Shelley A. Phipps and Peter S. Burton
Many
economists have until fairly recently treated the family as a "black
box" -- analysing the behaviour of "the family" rather
than of the individuals within the family. In this paper, we outline
the new "collective" approach to modelling family behaviour
which makes explicit the fact that families consist of individuals
with different tastes and different experiences who may sometimes
be in conflict with one another. This paper argues that new developments
in the economics of the family are of interest to policy-makers because
many policy conclusions are sensitive to the model of the family which
is adopted. We illustrate the importance of the collective approach
to decisions about child-support guidelines, automatic withholding
of support payments, child benefits, cash versus kind transfers, and
individual versus family taxation.
The Canada-European Union Turbot War: A Brief Game Theoretic Analysis
Paul C. Missios and Charles Plourde
This
paper examines the conflict over catch quotas for turbot on the Grand
Banks of Newfoundland between the European Union (EU) and Canada.
Economic game theory is used to analyse Canadian policy, EU policy,
and the ensuing resolution. Recommendations are provided for future
agreements regarding the proper management of fish stocks to ensure
the long-term viability of these resources.
Telefilm Canada Investment in Feature Films: Empirical Foundations
for Public Policy
Adam Finn, Colin Hoskins and Stuart McFadyen
The
most important current approach to supporting the feature film industry
is through direct investment by Telefilm Canada. In this paper we
set out to provide empirical foundations to guide Telefilm's investment
strategy. To provide context for the empirical analysis, the rationale
for government subsidy is analysed to determine the appropriate goals
for such a strategy. Our empirical analysis is primarily designed
to determine whether, as is commonly supposed, these goals are in
conflict and hence policy-makers are inevitably faced with difficult
trade-offs. We find that, generally speaking, this is not the case.
Our empirical work also sheds light on the advisability of the Federal
Government's general policy direction away from tax incentives and
toward direct investment and negotiation of international co-production
treaties.
Payroll Taxes in the Finance of Social Security
Jonathan R. Kesselman
The growing use of payroll taxes to finance social security has raised
concerns about their potential effects on employment. This analysis
reviews evidence about the economic attributes of payroll taxes and
compares them with alternate means of finance. First, the comparative
attributes of general payroll taxes unattached to benefit programs
are examined, and their long-run performance in economic efficiency
and growth are found to be relatively favourable. Second, the reasons
for using payroll taxes to finance social security programs in particular
are assessed. The nature of benefit-tax linkages and the associated
incentive effects are explored. Third, evidence on the long-run incidence
of employer payroll taxes and their employment effects is assessed.
It is found that most or all of the short-run employment effects dissipate
in the longer run, as the tax burden is shifted into lower pay. Policy
findings are that payroll taxes are well suited for financing social
security, benefit-tax linkages may need reform in some programs from
both the benefit and tax sides, and the transitory employment effects
of changes in payroll tax rates should not dominate longer-run considerations
for public policy.
