Friday, June 20, 2008

The new (Canadian) Liberal tax plan

The Liberal Party of Canada, official opposition, just presented its new tax reform, entitled the Green Shift. It is a very pleasant read, not the least because there is a lot of sound Economics in it. It also addresses a lot of the issues discussed on this blog.

Here is a summary of the executive summary: to address environmental issues and improve incentives to work, the tax system is shifted away from income towards pollution. Carbon emissions are taxed, at increasing rates over four years, and tax rates on household and corporate income are reduced in parallel to render this reform tax neutral. As we advocated before, we need to truly tax "sins" at the appropriate level so that user take correctly into account the externalities they exert on others. The revenue can then be used to remove taxation on activities that are good, like earning an income, hiring people, etc.

A very good read, with only little political pandering. Too bad the Liberals are currently in the opposition.

1 comment:

Anonymous said...

I am surprised you do not criticize the proposal for pandering to the North by providing more tax reductions there. Why subsidize a inhabitable place? But I guess, this proposal is overall a huge step forward.