Consumption taxation is the most important source of tax revenue worldwide after income taxation. While income tax is comprehensively studied in basic tax law courses across the country, law schools often provide limited opportunities for students to explore the economic, political, and legal complexities of consumption taxation. Many economists favour consumption taxation due to its neutrality towards economic actors. Consumption taxes are also considered more efficient for controlling the economy in the interests of economic stability compared to income taxes. Nonetheless, the implementation of consumption taxation raises pertinent questions about equity and distributive justice due to its potential regressivity.
The primary form of consumption tax in Canada is the federal Goods and Services Tax (GST) and, in some provinces, the Harmonized Sales Tax (HST) or the Provincial Sales Tax (PST). Most Canadians pay consumption taxes daily on the goods and services they acquire. Globally, consumption taxes account for a significant and growing proportion of tax revenues. Beyond its pervasiveness and apparent simplicity, consumption taxation elicits interesting political and legal questions. Politically, the adoption of the GST in Canada in the 1990s faced opposition from almost 80 percent of Canadians, despite the broad support of public finance scholars. Technically, the Canadian consumption tax system is globally unique. It generally mirrors the European-style value-added tax but is one of the few systems worldwide to have been successfully implemented at a subnational level.
This seminar examines the nature and application of consumption tax law in Canada and explores common principles of consumption taxes in other jurisdictions. It discusses fundamental issues such as consumption versus income as a basis for taxation, overviews its underlying principles and policies, and analyzes the Canadian rules under the Excise Tax Act. Students will learn why consumption is taxed, the different forms of consumption taxes, the key principles of modern consumption tax systems, and how those principles are operationalized in the Canadian tax system. Additionally, students will learn problem-solving by applying normative concepts together with basic technical rules. The seminar will help students develop important legal skills, such as statutory interpretation, analytical thinking, problem-solving, and writing. Taxation Law is not a prerequisite.
Method of Evaluation: Research paper (7,000 words) - 60% of the final grade; Class participation, quizzes, and reflection notes - 40% of the final grade.