ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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As many of you are aware, due to measures
to combat Covid, many governments
incurred steep deficits which added to the
debt. Some governments are now
contemplating tax increases to help reduce
the deficit and/or debt. Possible ways of
increasing revenue are to increase income
taxes and/or sales taxes such as the
GST/HST. Sources of income that taxes are
paid on include labour (work) as well as
business profits and investment earnings.
Assuming that taxes are to be raised, which
tax increase would be least detrimental to
long-term economic growth, a GST/HST
increase or an increase in income tax?
Assume that either of the increases would
be revenue neutral, i.e., the federal
government would take in the same
amount of revenue with either tax that is
raised.
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Transcribed Image Text:As many of you are aware, due to measures to combat Covid, many governments incurred steep deficits which added to the debt. Some governments are now contemplating tax increases to help reduce the deficit and/or debt. Possible ways of increasing revenue are to increase income taxes and/or sales taxes such as the GST/HST. Sources of income that taxes are paid on include labour (work) as well as business profits and investment earnings. Assuming that taxes are to be raised, which tax increase would be least detrimental to long-term economic growth, a GST/HST increase or an increase in income tax? Assume that either of the increases would be revenue neutral, i.e., the federal government would take in the same amount of revenue with either tax that is raised.
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