Funding Social Policy

Abstract

Abstract This chapter compares tax policies of Canada with other advanced democracies. It starts by establishing the facts about tax policies in Canada at the federal level, which are characterized by an equilibrium of relatively low tax with a high degree of tax progressivity. Then, the chapter explains the size and shape of taxation in Canada by presenting three complementary perspectives. It presents a functionalist perspective focusing on revenue needs, a distributional perspective highlighting the role of Canada’s majoritarian electoral system and system of interest group representation and the sectoral perspective focusing on the country’s growth model. The last section explains the role of federalism in shaping Canada’s tax policies and stresses interprovincial differences in tax policy choices. Overall, this chapter contributes to our understanding of the political economy of the financing of social policy in the context of a decentralized federation.