A Separate Personal Income Tax Collection System For Alberta: Advantages and Disadvantages

Grady, Patrick (2004): A Separate Personal Income Tax Collection System For Alberta: Advantages and Disadvantages.

Abstract

The Province of Alberta has been a participant in the Tax Collection Agreements (TCAs) with the Federal Government covering the personal income tax since their inception in 1962. Under the terms of this agreement, the Federal Government undertakes to collect the Alberta personal income tax at no charge provided that the Government of Alberta agrees to levy its tax within a commonly agreed framework.

This paper provides an assessment of the overall advantages and disadvantages for Alberta of participating in the Tax Collection Agreement for personal income tax. Its overall conclusion is that TCAs have worked very well in enabling Canadian governments to achieve their shared tax policy objective, while at the same time reducing tax complexity, duplication and cost, and promoting tax harmony. And the new more flexible TCA framework with its tax-on-income option, the TCAs should work even better and be able to accommodate the legitimate tax policy objectives of provincial governments that were constrained by the old TCA, which required provinces to levy taxes on the federal basic tax rather than the tax base.

• Item Type: MPRA Paper
• Language: English
• Keywords: personal income taxation in Canada, Tax Collection Agreement, Canadian Federal-Provincial Fiscal Arrangments
• Subjects: H - Public Economics > H7 - State and Local Government ; Intergovernmental Relations > H77 - Intergovernmental Relations ; Federalism ; Secession; H - Public Economics > H2 - Taxation, Subsidies, and Revenue > H24 - Personal Income and Other Nonbusiness Taxes and Subsidies; H - Public Economics > H7 - State and Local Government ; Intergovernmental Relations > H71 - State and Local Taxation, Subsidies, and Revenue

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