Consumption Tax Law

Quick Info
(3066.03)  Seminar
Professor I. Ozai
3 credit(s)  2 hour(s);
Videos, lecture, quizzes, reflection notes, group discussions, guest contributors
Upper Year Research & Writing Requirement

Consumption taxation is the most important source of tax revenue worldwide after income taxation. Still, although the latter is comprehensively studied in basic tax law courses across the country, law schools often provide limited opportunity for students to discuss and learn about the economic, political and legal complexities of consumption taxation. Many economists favour consumption taxation due to its neutrality on economic actors. Consumption taxes are also considered to provide a more efficient instrument for controlling the economy in the interests of economic stability than income taxes. Nonetheless, the implementation of consumption taxes raises relevant 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 and, in some provinces, the Harmonized Sales Tax or the Provincial Sales Tax. 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. From a political perspective, the adoption of the Goods and Services Tax in Canada in the 90s faced the opposition of almost 80 percent of Canadians, despite the wide support of most public finance scholars. From a technical standpoint, the Canadian consumption tax is globally unique. It generally mirrors the European-style value-added tax but is one of the few worldwide to have been successfully implemented at a subnational level.

This seminar examines the nature and the application of consumption taxation in Canada. 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. It also covers important challenges with respect to the design of consumption taxes, such as regressivity, e-commerce, fraud, and financial services. 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. In addition, students will learn how to problem solve by applying normative concepts together with the basic technical rules. This seminar focuses on Canadian consumption taxation but will also explore some common principles of consumption taxes in other jurisdictions. The seminar will help students develop important legal skills, such as statutory interpretation, analytical thinking, comparative legal research, problem-solving and writing. Taxation Law is not a prerequisite.