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UBC Theses and Dissertations

Strategic political positioning and tax policy : recent VAT policy changes in Canada and Germany Walsh, Mark James


During the twenty-first century, why have some welfare state governments shifted their tax system towards a greater dependence upon consumption taxes, while other governments have chosen to move away from this dependence? This paper addresses that question by examining the contemporary politics of taxation in Canada and Germany. It analyzes what causes a government to choose employ specific tax policy instruments. This paper contends that, if a government is insecure and in need of enlarging its support base, it will largely ignore fiscal policies that predominantly focus on improving aggregate economic conditions in favour of policies which provide fiscal benefits to necessary constituencies, unless both dire economic conditions and adequate blame avoidance opportunities exists. While Canada chose to shift its tax burden away from consumption taxes because these necessary conditions did not exist, Germany chose to shift its tax burden towards consumption taxes because these conditions did exist.

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