Richard M. Bird

University of Toronto | U of T · Rotman School of Management

Article 82 of the United Nations Convention on the Law of Sea imposes a levy on the exploitation of non-living resources in international waters. The first application of this provision will likely occur in a few years with respect to oil and gas in the North Atlantic near Canada. Those looking to develop international tax sharing of corporate taxe...

One of the few certainties about Canada's future is that tax policy will change over time, especially, perhaps, with respect to income taxes. Exactly what changes are made will depend not only on changes in economic conditions and the concerns of the party in power but also on how we ("the people") think of taxes as symbols of what we are and want...

Over the years, many proposals for global taxes—taxes levied on a worldwide basis—have been made. None has been successful, essentially because one cannot have global taxes without a global government. This paper first reviews some major global taxes that have been proposed and then considers whether experience in two other spheres in which countri...

Most current discussion of the infrastructure gap in Canada today often amounts to little more than a plea for someone else to pay the bills. However, although there are some reasons for higher-level governments to provide some local infrastructure projects, in the end, the bill must be paid either by user charges or by taxing someone and, whenever...

Corporate tax reform has long been a contentious issue in Canada. Official commissions, academics and others have often proposed changes in the way we tax corporations. During the last 30 years, perhaps largely owing to concerns about international competitiveness, the corporate tax rate has been substantially reduced. Since revenues did not declin...

Although simplification is presumably the opposite of complexity, or at least a move in the opposite direction, tax simplification is complicated. It is complicated in part because tax complexity itself is complicated, and may be manifested in many ways with many different effects and many causes. Similarly, tax simplification may be undertaken for...

Reforming international taxation -how national tax systems interact with each other- is an issue that is always technically complex, often economically significant, and sometimes politically explosive. Some expect major changes in international taxation in the near future but no one yet knows what changes will be made or when, how, and how effectiv...

The question considered in this chapter is whether decentralization is likely to hurt or help national unity in “countries at risk.” We begin with a literature review, focusing on three particular questions: the size and number of nations; the determinants of decentralization; and, finally, and bearing most directly on our topic, the links between...

Infrastructure finance has been much discussed recently. We first present a brief argument about the importance of establishing what we call the Wicksellian Connection – a clear and meaningful linkage between expenditures and revenues – essentially because unless it is decided who is going to pay for infrastructure and how, we cannot sensibly decid...

The case for decentralizing taxes does not imply that these taxes need to be administered locally. Nor is it is necessarily constrained by the weakness of local tax administration. Tax decentralization and the decentralization of tax administration are related but separable decisions. As discussed in this paper, different countries have at differen...

Many countries are decentralizing in various ways. Decentralization is often intended at least partly to make government more efficient, flexible, and responsive. Many studies have evaluated the effects of decentralization on the provision of such services as health and education as well as on corruption, stability, and growth. Because what governm...

Taxation and Development highlights the importance of better understanding the ways in which taxes and expenditure are linked. Focusing on developing countries, the book argues for a broader approach to the topic, with a secondary focus on developing and applying new modeling techniques to country-specific data. © Richard M. Bird and Jorge Martinez...

This paper considers several distinct but related aspects of what we are doing when we attempt to measure and evaluate the fiscal health of cities: How is the fiscal health of cities defined in the literature? How is this concept related to fiscal sustainability? How may fiscal health be measured in practice? And to what extent may fiscal health in...

We have learned a great deal about taxation and development over the last half-century. However, we still have much to learn. Even the best research answers to particular questions have usually turned out to be extremely difficult to apply in practice. Over the past fifty years what might be called the standard approach to tax and development has u...

This paper is a non-technical discussion by an economist and lawyer, each with long international experience in taxation, of the constraints and objectives that in principle and practice shape tax policy design. After discussing the main factors traditionally taken into account by those charged with designing tax policy in any country – such as rev...

This report presents and discusses the findings of the “Study to quantifyand analyse the VAT Gap in the EU-27 Member States” (Contract TAXUD/2012/DE/316, FWC No. TAXUD/2010/CC/104), conducted by CASE and CPB.The structure of this report is as follows. In Chapter 1, we discuss the structure of the VAT systems in the EU, the broad trends in the EU ec...

The most striking tax development of the last half century has been the worldwide rise of the VAT. Most countries now have national VATs. In addition, several large federal countries – Brazil, Canada, and India – also have regional (state or provincial) VATs that, like national VATs, are general consumption taxes administered in principle through a...

Canadians developed and implemented a sales tax system that no one in their right mind would have designed from scratch. Nonetheless, more by accident than design, Canada ended up being a bold innovator in sales tax policy and administration in several important respects. For decades, academics had argued almost unanimously that one could not impos...

This review of public finance in developing countries covers tax advice and practice during the past half century, principles of good public finance, some key issues in development finance during the period, fiscal decentralization and some important open questions. Thinking about good tax systems for developing countries has changed from systems c...

Canada is not a country with a reputation for bold experimentation. However, Canadian experience demonstrates conclusively that an invoice-credit, destination-based value-added tax (VAT) is workable at the subnational level, with both federal and provincial governments retaining full control over the rates of their sales taxes as well as retaining...

This paper reviews the literature on the costs of VAT, beginning with a review of concepts with regard to different aspects of administrative and compliance costs and then a review of quantitative estimates of such costs. It concludes with a brief discussion of VAT non-compliance and fraud with special reference to European Union case.in the Europe...

At present most social protection programs in Latin American countries are financed by payroll taxes levied on the formal sector. Increasingly, some countries are both extending some benefits similar to those received from these programs to non-contributors and financing such extensions as well as some benefits for contributors from general revenue...

This paper reviews the evolution and current state of subnational taxation in five large emerging countries: Brazil, Russia, India, China, and Nigeria—BRIC plus one. As these case studies show, intergovernmental fiscal relations in any country are inevitably both path-dependent and context-sensitive. In India and Brazil, for example, subnational go...

This paper considers how economic thinking about taxation in developing countries has changed over the last half century. It suggests that three different ‘models’ of development taxation may be discerned over this period. The key element in the first model, which was derived from the dominant public finance literature in the 1950s and 1960s, was t...

This summary provides the key findings and assessments of a major evaluation of the existing EU VAT system. Reading it, one may be struck by the number of faults and issues we highlight. We do not want to be relentlessly negative: virtually all taxes have problems, distort firm and consumer behaviour to some extent, and entail costly compliance bur...

This summary provides the key findings and assessments of a major evaluation of the existing EU VAT system. Reading it, one may be struck by the number of faults and issues we highlight. We do not want to be relentlessly negative: virtually all taxes have problems, distort firm and consumer behaviour to some extent, and entail costly compliance bur...

This summary provides the key findings and assessments of a major evaluation of the existing EU VAT system. Reading it, one may be struck by the number of faults and issues we highlight. We do not want to be relentlessly negative: virtually all taxes have problems, distort firm and consumer behaviour to some extent, and entail costly compliance bur...

This summary provides the key findings and assessments of a major evaluation of the existing EU VAT system. Reading it, one may be struck by the number of faults and issues we highlight. We do not want to be relentlessly negative: virtually all taxes have problems, distort firm and consumer behaviour to some extent, and entail costly compliance bur...

This summary provides the key findings and assessments of a major evaluation of the existing EU VAT system. Reading it, one may be struck by the number of faults and issues we highlight. We do not want to be relentlessly negative: virtually all taxes have problems, distort firm and consumer behaviour to some extent, and entail costly compliance bur...

This summary provides the key findings and assessments of a major evaluation of the existing EU VAT system. Reading it, one may be struck by the number of faults and issues we highlight. We do not want to be relentlessly negative: virtually all taxes have problems, distort firm and consumer behaviour to some extent, and entail costly compliance bur...

Five questions arise with respect to intergovernmental finance in any country: (1) Who does what?-- the question of expenditure assignment. (2) Who levies what taxes?-- the question of revenue assignment. (3) How is any imbalance between the revenues and expenditures of subnational governments

The most important tax development of the last half century has undoubtedly been the rise to prominence of the value-added tax (VAT).2 This tax has taken center stage almost everywhere (with the significant exception of the United States) and has become a revenue mainstay for many countries. The success of the VAT reflects a variety of factors: its...

There is little evidence of regional, let alone worldwide, trends in local finances, although trends within particular countries certainly exist. Given the path-dependent and context-specific nature of country experiences, one must be very careful both in categorizing the local finance systems found in different countries and in making cross-countr...

Over 330 million people live in India’s 5,165 cities, and 35 cities have a population of over a million each. Three (Mumbai, Delhi, and Kolkata) of the 10 largest metropolises in the world are in India. Over two-thirds of India’s GDP originates in urban agglomerations in the country. However, urban governance and finance in India leave much to be d...

This paper reviews the literature on tax assignment in decentralised countries. Ideally, own-source revenues should be sufficient to enable at least the richest subnational governments to finance from their own resources all locally-provided services that primarily benefit local residents. Subnational taxes should also not unduly distort the alloca...

In the constitutional moment known to Canadians as Confederation, in 1867 the UK Parliament passed the British North America Act, 1867 (now known as the Constitution Act, 1867), thereby creating the Dominion of Canada. From the time of Confederation, there have been, broadly speaking, two sets of issues addressed through Canadian federalism - cultu...

Canadian experience shows that a standard invoice-credit destination-based value added tax (VAT) can be successfully imposed at the subnational level of government. In fact, two different varieties of subnational VATs – the QST and the HST -- exist in Canada. The Quebec Sales Tax (QST) is imposed on essentially the same base as Canada's federal VAT...

Section 1 of this paper suggests that there is little evidence of regional let alone world-wide trends in local finances although trends within particular countries certainly exist. Section 2 then argues that the path-dependent and context-specific nature of country experiences implies that one must be very careful both in categorizing the local fi...

The dual income tax combines a progressive tax on labor income and a lower flat rate tax on income from capital. Denmark, Finland, Norway, and Sweden adopted dual income taxes to address a set of tax challenges that arose in the late 1980s and early 1990s. Although developing countries face much different economic, political, and tax environments f...

The last two centuries have seen the rise of the nation-state as the dominant political institution around the world. However, “state” and “nation” are not always equivalent. In a surprising number of countries, autonomist and secessionist movements of varying strength and character remain active. The question we consider in this paper is whether d...

Strengthening subnational governments is high on the policy agenda of many developing countries. From an economics perspective, the most important potential benefit from decentralization is the increased efficiency (and consequent welfare gain) that comes from moving governance closer to the people. To achieve this benefit, however, close attention...

The “smartest” development policy needs to be underpinned by “smart” tax policy. However, the best tax policy in the world is worth little if it cannot be implemented effectively. What can be done, to a considerable extent, inevitably determines what is done. Increasing tax revenues requires an effective tax administration: new taxpayers must be id...

For more than half a century, scholars and international agencies have been making recommendations about taxation in developing countries. The advice economists have offered to developing countries has changed over time, particularly regarding income and consumption taxes. Why? What do we know now about taxes and developing countries that we did no...

Benchmarking as a way of establishing standards for evaluating the performance of tax administrations has become increasingly popular in recent years. Two common approaches to benchmarking are ‘benchmarking by numbers’ – the quantitative approach and ‘benchmarking by (presumed) good institutional practice’ – the qualitative approach. Both these app...

Consumer demand responses – responses to differential taxation of across commodities Savings-pension portfolio mix – ‘Life Life-cycle cycle ’ accumulation of savings and pension contributions Forms of remuneration – CGT reforms and the non-alignment with labour income rates Organisational form – UK chart on incorporations and tax reforms Draw on ev...

During the nineties, Europe became a major recipient of FDIs but Italian regions have been largely excluded from this process. Was it due to their characteristics, or were Italian regions “doomed” by a negative country effect? In this paper we address this issue by estimating the determinants of multinational firms’ location choices in 52 EU region...

This paper considers a simple question: does it make a difference if people can see a tax? Underlying this question are some serious methodological and political issues that are as yet largely unexplored concerning both the relationship between tax economics and tax policy and the connection between tax politics and the functioning of democracy in...

This paper considers the proposition that recent tax policy trends have been decisively influenced by tax research. In both the OECD countries and developing countries, the two most important changes in tax systems in recent decades have been the introduction of the VAT and the general lowering and flattening of statutory income tax rates. The down...

Over the years the number and importance of earmarked grants has at times risen and at times fallen in different countries. The conventional theory of fiscal federalism, which sees earmarking largely as a means to deal with positive spillovers in local expenditures, explains neither the level of such grants nor the trends over time. Nor can it read...

We present a summary analysis of the important changes in township and village finance in China between 2000 and 2004, based on a survey of 100 villages in 50 townships in 25 counties in five provinces. The reforms included the elimination of regular fee assessments imposed on rural households and the removal of the long-standing agricultural tax a...

The use of the spending power by the federal government to affect activities not within its normal legislative powers has long been a contentious issue in Canada. Controversy over such federal "intrusions" on state power of course arises in various guises in other federal countries also. This paper first sets out how the federal spending power appe...

Assigning taxes to regional governments is a major issue in all federations. Although neither the literature nor international experience provides clear guidelines on precisely what taxes should be assigned to states, we suggest that Australia should nonetheless reconsider the advisability of continuing down its current path towards total state dep...

For decades, the conventional view was that one could not impose a standard invoice-credit destination-based value added tax (VAT) at the subnational level of government. Canada's almost two decades of experience with just such a VAT demonstrates conclusively that this view is incorrect. Not only can it be done, but it has been done, and done well....

A decade ago, several Canadian provinces replaced the retail sales taxes with value-added taxes. This paper estimates the effects of this tax substitution on consumer prices in the reforming provinces. Consistent with theory, we find that the resulting effective tax-rate changes were shifted forward to consumers in most sectors of the economy. The...

Fiscal experts have for years proposed a holy trinity of tax reform options for developing countries: broader bases, lower rates, and better administration. The review in this paper of fifty years of experience suggests that what might be called the BBLR approach - broader bases and lower rates - to tax structure reform holds up fairly well. Noneth...

This paper first restates the lessons to be learned from Richard Musgrave's pioneering discussion of the tax assignment issue. Next, it considers subsequent developments in the theory of fiscal federalism related to the issue of tax assignment. Surprisingly little clear guidance is offered by the theoretical discussion when it comes to the practica...

Tax systems in developing countries, like those in more developed countries, face both new challenges and new possibilities as a result of technological change. In developing countries, taxpayers and tax administrations must cope with more difficult environments with fewer resources. Some issues (such as privacy, the benefits and costs of public/pr...

This paper reviews the literature and evidence on the most appropriate structure of regional and local taxes in developing countries. A good subnational tax system is critical to an effective and sustainable system of intergovernmental fiscal relations – a need that has become increasingly important around the world as more and more public services...

A common concern with fiscal decentralization has been the increased risk of macroeconomic instability. Sub national governments may behave in a fiscally irresponsible fashion. Central governments may feel obligated to bail out insolvent lower-tier governments. Control over the fiscal tools needed for macroeconomic management may be lost. However,...

We review the changing nature of tax policy in developing countries over the last 30 years and consider what factors determining the level and structure of tax revenues in such countries may have changed recently and how such changes may affect future developments.

This paper evaluates a pilot program run by a company called OPOWER, previously known as Positive Energy, to mail home energy reports to residential utility consumers. The reports compare a household’s energy use to that of its neighbors and provide energy conservation tips. Using data from randomized natural field experiment at 80,000 treatment an...

Taxes matter. We all know we need them to pay for public services. But most of us complain about them -- exercise our "voice" -- and often try to dodge them -- to "exit" -- when we can. Those who design and implement tax systems, like those who try to escape them, for the most part consider themselves to be eminently ‘practical’ people responding t...

In this paper we argue that a more legitimate and responsive state is an essential factor for a more adequate level of tax effort in developing countries and high income countries. While at first glance giving such advice to poor countries seeking to increase their tax ratios may not seem more helpful than telling them to find oil, it is presumably...

We consider in this paper how emerging countries may in practice best design and develop tax policies, given the complex economic and political environments they face. After an overview of what tax systems look like around the world, we discuss the principal objectives that countries may attempt to achieve through tax policy. We conclude by conside...

Major changes in federal tax policy over the last decade have added to the pressures on provincial public finances and resulted in increased interest in possible ways to restructure Canada's federal finances by reassigning taxes. I review several recent proposals along these lines, but conclude that on the whole major reassignments of taxes seem un...

Canadians are all too aware of such effects of “federal finance” as the impact of federal deficit–cutting on provincial and local governments. Economists have a well–developed theory of “fiscal federalism” that they commonly use to analyse problems of multilevel finance. Are “federal finance” and “fiscal federalism” just different names for the sam...

The history of property tax reform in Ontario dates back to 1967 when it was recommended, among other things, that real property be assessed at market value. Since that time, several studies have been undertaken, culminating in, the June 1978 announcement of the Treasurer that property tax reform would not be implemented. Some subsequent reform mea...

In this paper we review several ‘models’ of governing structure found in metropolitan areas around the world from a fiscal perspective. We evaluate how different models achieve coordination of service delivery over the entire metropolitan area, the extent to which they allow for the equitable sharing of costs of services throughout the metropolitan...

The author suggests that the U.S. states should consider adopting some form of value-added taxation.

The structure and purpose of this paper reflect both its origins and my limitations. As part of a broader study of “Taxation for Effective Governance and Shared Growth” being carried out for the U.K. Department for International Development (DFID), I was asked to prepare a background paper from a tax perspective. The project as a whole was intended...

We review the evidence on the regional incidence of federal budgets in Canada, considering both aggregate results and some specific federal expenditure programs as well as some relevant issues (e.g., the regional effect of some regulatory programs) not captured in fiscal flows. The regional distributional pattern revealed in this analysis is both r...

Value-added tax (VAT) now dominates tax systems around the world. But should every country have a VAT? Is the current VAT always as good as it could be in economic, equity and administrative terms? In developing and transitional countries the answers to such questions are critical to stability, growth and development. VAT is a critical fiscal tool...

We argue in this paper that better rural local governments are needed to improve the lives of billions and that a good property tax is the key to improving rural local governments. Moreover, we suggest that only by giving local governments both the incentive and the ability to levy a property tax can effective rural local government and a meaningfu...

I argue in this paper that state value-added tax is more likely to be the right way to tax sales at the state level than seems to be recognized in most current US discussion. As Canadian experience demonstrates, a state VAT is both better in principle than even the best state retail sales tax (RST) and should be not much more difficult to administe...