Unit 9

Question 1

Define abatement

Answer 1

partial withdrawal of the federal government from certain tax fields to allow provinces to maximize their revenues

Question 2

Define basic federal tax

Answer 2

amount of tax owed to federal government before subtracting tax credits and adding surtaxes

Question 3

Define budget

Answer 3

annual statement setting out expected government revenues and expenditures

Question 4

Define debt

Answer 4

total amount of money owed by a government to lenders as a result of its borrowing practices

Question 5

Define direct tax

Answer 5

tax paid directly by a person or firm on which it is levied

Question 6

Double taxation

Answer 6

taxation of the same income more than once

Question 7

Over taxation

Answer 7

total tax burden discourages economic activity

Question 8

Horizontal revenue gap

Answer 8

difference in revenue available to different provinces

Question 9

Indirect tax

Answer 9

tax not levied directly on the final consumer but is hidden in the price of the good or service (e.g., duty)

Question 10

National adjustment grants

Answer 10

unconditional federal transfer to have not provinces, never implemented, but is the basis for the current system

Question 11

Rowell Sirois Commission

Answer 11

study group created to respond to financing crisis of the 1930s, recommended national adjustment grants

Question 12

Subsidy, grant

Answer 12

government payment, can be conditional or unconditional

Question 13

surtax

Answer 13

additional tax levied on the base tax

Question 14

Tax

Answer 14

mandatory payment made by individuals and corporations to government

Question 15

tax base

Answer 15

amount of money on which tax rates are levied

Question 16

tax collection

Answer 16

principle that underlies current federal-provincial fiscal agreements

Question 17

tax credit

Answer 17

deducted from the income tax of an individual, compared to tax deduction which is subtracted from the total income

Question 18

tax harmonization

Answer 18

coordination of federal and provincial tax system to promote administrative efficiency and reduce chances of double taxation

Question 19

tax jungle

Answer 19

uncoordinated tax system

Question 20

tax rate

Answer 20

amount of tax expressed as a percentage levied on an individual’s cincome

Question 21

tax rental

Answer 21

principle that underlay agreements in 1940-1062, in which federal government collected all taxes and paid each province a rental fee

Question 22

tax sharing

Answer 22

federal and provincial both occupy personal and corporate income tax fields, federal government administers on behalf of most provinces

Question 23

vertical revenue gap

Answer 23

the difference in revenue available to the two levels of government

Question 24

How does the constitution allocate taxing authority between Ottawa and the provinces?

Answer 24

both: income, corporate, retail sales tax
federal: no restrictions
provinces: also property

Question 25

Why was the Rowell-Sirois report shelved?

Answer 25

the three provinces who would have been ineligible for grants objected to it

Question 26

How did federal and provinces handle vertical revenue gap first 75 years after Confederation

Answer 26

federal subsidies and grants