Bulletin n. 2-3/2012 | ||
October 2012-February 2013 | ||
Ferede, Ergete, Dahlby, Bev |
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The Impact of tax Cuts on Economic Growth: eviedence from Canadian provinces | ||
in National Tax Journal , volume 65 n.3 , 2012 , 563-594 | ||
We examine the impact of the Canadian provincial governments' tax rates on economic growth using panel data covering the period 1977-2006. We find that a higher provincial statutory corporate income tax rate is associated with lower private investment and slower economic growth. Our empirical estimates suggest that a I percentage point cut in the corporate tax rate is related to a 0.1-0.2 percentage point increase in the annual growth rate. Our results also indicate that switching from a retail sales tax to a sales tax that is harmonized with the federal value-added sales tax boosts provincial investment and growth. | ||